Functional Forms in Discrete/Continuous Choice Models With General Corner Solution
AbstractIn this paper we present a new utility model that serves as the basis for modeling discrete/continuous consumer choices with a general corner solution. The new model involves a more flexible representation of preferences than what has been used in the previous literature and, unlike most of this literature, it is not additively separable. This functional form can handle richer substitution patterns such as complementarity as well as substitution among goods. We focus in part on the Quadratic Box-Cox utility function and examine its properties from both theoretical and empirical perspectives. We identify the significance of the various parameters of the utility function, and demonstrate an estimation strategy that can be applied to demand systems involving both a small and large number of commodities.
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Bibliographic InfoPaper provided by Department of Agricultural & Resource Economics, UC Berkeley in its series Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series with number qt7z25t659.
Date of creation: 30 Dec 2008
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choice modeling; Quadratic Box-Cox utility function; statistical analysis;
Other versions of this item:
- Felipe Vásquez & Michael Hanemann, 2009. "Functional Forms in Discrete/Continuous Choice Models with General Corner Solution," Working Papers 08-2009, Departamento de Economía, Universidad de Concepción.
- Vasquez Lavin, Felipe & Hanemann, W. Michael, 2008. "Functional forms in discrete/continuous choice models with general corner solution," CUDARE Working Paper Series 1078, University of California at Berkeley, Department of Agricultural and Resource Economics and Policy.
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