This paper estimates the sensitivity of fund flows to the expense ratio in the mutual fund industry using Berry (1994)'s discrete choice model of product differentiation. Based on logit and nested logit estimations with instrumental variables, I find the sensitivity of fund flows to the expense ratio in growth and index fund sectors to be significantly greater than those of previous studies. I also show that expense ratio competition in the mutual fund industry has intensified over time. These findings suggest that accounting for expense ratio endogeneity leads to a substantial improvement in the estimation of the impact of expense ratios on fund flows.