identification problem

Identification Problem

In econometrics, the difficulty in regressing an equation when too many variables change. For example, if a good's supply changes but demand does not, one can devise an estimation of the demand at a particular price. However, this is difficult if both supply and demand change.

identification problem

the difficulty encountered in attempting to analyse the variables that affect demand when simultaneous changes in demand and supply conditions are experienced. Empirical data on prices and quantities of a product traded cannot easily be used to identify a DEMAND CURVE for that product when product demand and product supply are both changing.