Digital Demand: Demand for digital cameras on eBay,” available at www.ios.neu.edu/papers/s4g3.pdf

The paper estimates the demand for new digital cameras sold in eBay auctions. EBay data seems to offer significant advantages over traditional transactions data for estimating demand for differentiated products. How-ever, there are a number of concerns including censoring bias and the inter-pretation of the bidding behavior. This paper discusses these problems as well as possible solutions. The paper presents results from three different methods for estimating demand for differentiated products on eBay. The re-sults suggest that the demand for digital cameras is highly elastic and there isn’t a lot of substitution, particularly across brands. ∗Thanks to George Deltas, Luke Froeb, Laura Hosken, Mike Sandfort, David Schmidt, Unjy Song, Steve Tenn, and Robert Zeithammer. The paper also benefited from sugges-tions given at presentations at the IIOC (Chicago, 2004), Charles River Associates Inc and the FTC. Thanks also to Peter Newberry, Jorge Roberts and Jeanne Schoenfelder for excellent research assistance. Note that this paper does not necessarily represent the views of the Commission or any individual Commissioners. All remaining errors are our own. 1