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Using a multinomial probit to test for complementarity

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  • M'hand Fares

Abstract

This note shows that the structural parameter estimate of complementarity among innovation strategies can be recovered when the strategies are dichotomous if we use a multinomial probit model. That is, we can separate the complementarity between the innovation strategies from the unobserved heterogeneity, by estimating both the parameter of complementarity and the correlation coefficients in the error terms. This result holds because the multinomial probit, in contrast to the bivariate probit, is not an incoherent model.

Suggested Citation

  • M'hand Fares, 2014. "Using a multinomial probit to test for complementarity," Applied Economics Letters, Taylor & Francis Journals, vol. 21(3), pages 180-184, February.
    • Handle: RePEc:taf:apeclt:v:21:y:2014:i:3:p:180-184
    DOI: 10.1080/13504851.2013.848014
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