BLP Model

The BLP model (Berry, Levinsohn, and Pakes) is a tool used in economics to estimate how different car features and prices affect consumer choices in markets with many similar products. It accounts for the fact that consumers have different preferences and that companies' offerings and pricing strategies influence demand. By using this model, researchers can understand the impact of product characteristics on sales and evaluate market competition, helping both businesses and policymakers make informed decisions about product design, marketing, and regulation.