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A flexible nested logit model

Author

Listed:
  • Sergio Aquino DeSouza

    (Universidade Federal do Ceara)

Abstract

This paper develops simple but flexible nested logit. The basic idea is to introduce heterogeneity in the key parameter driving substitution patterns in the nested logit model: the correlation between utilities. By doing so the model generates a flexible demand system, overcoming an undesirable property of the classic nested logit. It is also relatively easy to estimate and compute, properties that could prove useful to researchers and practitioners trying to avoid the operational costs (i.e. numerical difficulties) of the general Random Coefficient model.

Suggested Citation

  • Sergio Aquino DeSouza, 2017. "A flexible nested logit model," Economics Bulletin, AccessEcon, vol. 37(4), pages 2854-2859.
    • Handle: RePEc:ebl:ecbull:eb-17-00833
    as

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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Demand estimation; discrete-choice models; flexible demand;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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