Bayes' Estimates Of The Double Hurdle Model In The Presence Of Fixed Costs
We present a model of market adoption (participation) where the presence of non-negligible fixed costs leads to non-zero censoring of the traditional double-hurdle regression. Fixed costs arise due to household resources that must be devoted a priori to the decision to participate in the market. These costs-usually a cost of time-motivate two-step decision-making and focus attentions on the minimum-efficient scale of operations (the minimum amount of milk sales) at which market entry becomes viable. This focus, in turn, motivates a non-zero-censored Tobit regression estimated through routine application of Markov chain Monte Carlo Methods.
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| Date of creation: | 2002 |
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| Handle: | RePEc:ags:cudawp:14741 |
| Contact details of provider: | Postal: Fax: 607-255-9984 Web page: http://aem.cornell.edu/ More information through EDIRC
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