The well-known structural model used to estimate market structure suffers from a severe collinearity problem if the marginal cost and demand equations are linear.

The well-known structural model used to estimate market structure suffers from a severe collinearity problem if the marginal cost and demand equations are linear.

A new information-based approach for estimating systems of many equations with nonnegativity constraints is presented. This approach, called generalized maximum entropy (GME), is more practical and efficient than traditional maximum-likelihood methods. The GME method is used to estimate an...