I am running a regression on vehicle demand (vehicle registrations in 2011)
with the following independent variables:
Assembly location
Price
Alloy wheels*
Transmission*
Number of seats
Number of doors
Driven wheels (front, rear or 4x4)
Maximum speed
0-62mph
Fuel type*
Fuel capacity
CO2 emissions
Vehicle tax
Insurance group
Customer ratings
Air conditioning*
Adult safety
Child safety
Cruise control*
Alarm*
Climate control*
Rear parking sensor*
Central locking*
Leather interior*
BHP
The paper is looking at consumer preferences, in particular how they
consider the origin of the vehicles they're looking to buy. Do consumers
want a domestically produced car or do they not care?
I have a few queries and guidance with any of them would be more than
appreciated as I am really struggling- despite hours of research. (I have
taken only one econometrics course whilst at University and so, have very
little knowledge on such matters).
1. As price is endogenous, how do I control for this? I was given a little
pointer and told to run a separate regression with the remaining independent
variables and price as the dependent variable but I wasn't sure how this
would help? I know that given there is more than one endogenous variable, it
is often preferred to tackle the causal questions separately.
Have also looked into running a two-stage least-squares regression whereby
lagged price is used to calculate a proxy for price that is uncorrelated
with the measurement errors of demand (registrations). This proxy could then
be substituted for the original price variable and estimated again?
2. Customer review scores are also endogenous so I'm not sure how to control
for this? Again, received a little pointer from a friend who mentioned
something about reduced form regressions to run a review score model but I'm
not sure what I'd do next?
Once again, ANY help on this would really be appreciated.
(I've read so many papers but given my lack of knowledge on the subject, I'm
finding it quite difficult to work my way round what they're saying so
figured this could help!)
On a lighter note- was thinking of titling the paper something along the
lines of:
Consumer Perceptions: Does the provenance of vehicles affect an individual's
purchasing journey.
Again, clutching at straws here and it probably isn't funny in the slightest
(I doubt the pun is even noticeable). Should I steer clear of such titles?
(Haha, another pun!!)
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