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When Can A Demand System Be Described By A Multinomial Logit With Income Effect?

Author

Listed:
  • Jacques-Francois Thisse
  • Philip Ushchev

    (National Research University Higher School of Economics)

Abstract

We show that a wide class of demand systems for dierentiated products, such as those generated by additive preferences, indirectly additive preferences, and Kimball-like homothetic preferences, can be given a multinomial logit foundation provided that the conditional indirect utility is nonlinear and varies with the whole price array.

Suggested Citation

  • Jacques-Francois Thisse & Philip Ushchev, 2016. "When Can A Demand System Be Described By A Multinomial Logit With Income Effect?," HSE Working papers WP BRP 139/EC/2016, National Research University Higher School of Economics.
    • Handle: RePEc:hig:wpaper:139/ec/2016
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    File URL: https://www.hse.ru/data/2016/06/01/1130394265/139EC2016.pdf
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    References listed on IDEAS

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    Cited by:

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    2. Federico Etro, 2023. "Hybrid Marketplaces with Free Entry of Sellers," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 62(2), pages 119-148, March.
    3. Colin J. Hottman & Ryan Monarch, 2018. "Estimating Unequal Gains across U.S. Consumers with Supplier Trade Data," Working Papers 18-04, Center for Economic Studies, U.S. Census Bureau.
    4. Matveenko, Andrei, 2020. "Logit, CES, and rational inattention," Economics Letters, Elsevier, vol. 186(C).
    5. Beck, Günter W. & Lein, Sarah M., 2020. "Price elasticities and demand-side real rigidities in micro data and in macro models," Journal of Monetary Economics, Elsevier, vol. 115(C), pages 200-212.
    6. Stephen J Redding & David E Weinstein, 2020. "Measuring Aggregate Price Indices with Taste Shocks: Theory and Evidence for CES Preferences," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(1), pages 503-560.
    7. Etro, Federico, 2017. "Research in economics and monopolistic competition," Research in Economics, Elsevier, vol. 71(4), pages 645-649.
    8. Behrens, Kristian & Murata, Yasusada, 2021. "On quantitative spatial economic models," Journal of Urban Economics, Elsevier, vol. 123(C).
    9. Fally, Thibault, 2022. "Generalized separability and integrability: Consumer demand with a price aggregator," Journal of Economic Theory, Elsevier, vol. 203(C).
    10. Lashkaripour, Ahmad, 2020. "Discrete trade," Journal of International Economics, Elsevier, vol. 126(C).

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    More about this item

    Keywords

    discrete choice; multinomial logit; demand systems; additive preferences; homothetic preferences;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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