Endogeneity justification I'm using a fixed-effects model to analyze car prices based on product's characteristics during a five year period. Steel price is used among others explanatory variables.
How to justify possible endogeneity of steel price in the regression model?
 A: A possible concern regarding endogeneity of steel prices is that car manufacturers potentially account for a large share of the overall steel demand in a given country. In that case, steel prices may not only be a determinant of car prices but car prices may as well predict steel prices. This is known as "reverse causality" (look for this term in your preferred econometrics textbook or internet search engine). Given that the relation between these two variables is varying over time the fixed effects estimator will not take care of the problem.
Using this argument you can even have an idea about the direction of the bias. If demand for cars rises (i.e. car prices rise) then the price for steel rises due to the higher demand from car manufacturers. Then the estimated coefficient of steel prices in your model will be overestimated.
edit:
Regarding your comment it seems worthwhile to discuss in general when you should expect endogeneity of a variable. The basic considerations are


*

*Is there a simultaneous or reverse relationship between the dependent and an explanatory variable?

*Is there an omitted variable that is both related to the dependent and one or more explanatory variables?

*Is a given explanatory variable potentially measured with error?


If you can answer any of these questions with yes on the basis of a logical argument, then you might expect endogeneity. You don't really have to justify endogeneity as Aksakal said but these are the kinds of questions that your audience (supervisor, thesis committee, etc) will be asking themselves and then they will ask you whether you have spotted those problems and if yes you you deal or intend to deal with them.
A: You don't have to justify endogeneity. It is usually the other way around: you try to justify that your model does not suffer from endogeneity, because this problem is so pervasive in any economic research.
In case of steel, I'd argue that on one hand the demand for cars is inversely related to the car prices which include steel cost, on the other hand, the demand for cars creates the demand for steel increasing its price. Now, show me that it's not true, because it's the duty of the researcher to argue that this has been taken care of. However, in order to raise an  issue of endogeneity I don't have to prove that it's there.
