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Thread: Is it alright to use quantity as dependent variable in absence of price information?

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    Is it alright to use quantity as dependent variable in absence of price information?




    Good afternoon,

    My panel data set includes information about unit sales, sales volume and other figures but the wholesale/retail price. I'd like to examine the effect of some determinants on the price of the product. So, can infer the effect on price by relying on the inverse relation between price and quantity? In other words, is it possible to use an estimation model with quantity as my dependent variable instead of the price variable? I couldn't find any paper that uses this method because they always had the price variable. I don't know how I could otherwise see whether the pricing strategy of the firm changes when facing competition with this limited data set.
    Thanks for your consideration.

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    Re: Is it alright to use quantity as dependent variable in absence of price informati


    It is not uncommon in the social science literature to use one DV when you really want to measure a second, because information on the second is not available. It is not really possible to know if this common method works, however. It depends on whether the relationship between the IV and the variable you are substituting for the variable you are really interested in, is similar to that of the IV and the variable you are really interested in You have to decide how reasonable that is, which is where theory and existing literature comes into play.
    "Very few theories have been abandoned because they were found to be invalid on the basis of empirical evidence...." Spanos, 1995

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