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Functional Forms in Discrete/Continuous Choice Models With General Corner Solution

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  • Vasquez Lavin, Felipe
  • Hanemann, W. Michael

Abstract

In 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.

Suggested Citation

  • Vasquez Lavin, Felipe & Hanemann, W. Michael, 2008. "Functional Forms in Discrete/Continuous Choice Models With General Corner Solution," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt7z25t659, Department of Agricultural & Resource Economics, UC Berkeley.
  • Handle: RePEc:cdl:agrebk:qt7z25t659
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    4. Hausman, Jerry A. & Leonard, Gregory K. & McFadden, Daniel, 1995. "A utility-consistent, combined discrete choice and count data model Assessing recreational use losses due to natural resource damage," Journal of Public Economics, Elsevier, vol. 56(1), pages 1-30, January.
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    Cited by:

    1. repec:eee:eejocm:v:26:y:2018:i:c:p:19-27 is not listed on IDEAS
    2. Bonnet, Céline & Richards, Timothy J., 2016. "Models of Consumer Demand for Differentiated Products," TSE Working Papers 16-741, Toulouse School of Economics (TSE).
    3. Chandra Bhat & Abdul Pinjari, 2014. "Multiple discrete-continuous choice models: a reflective analysis and a prospective view," Chapters,in: Handbook of Choice Modelling, chapter 19, pages 427-454 Edward Elgar Publishing.
    4. Kidokoro, Yukihiro, 2016. "A micro foundation for discrete choice models with multiple categories of goods," Journal of choice modelling, Elsevier, vol. 19(C), pages 54-72.
    5. Sikder, Sujan & Pinjari, Abdul Rawoof, 2013. "The benefits of allowing heteroscedastic stochastic distributions in multiple discrete-continuous choice models," Journal of choice modelling, Elsevier, vol. 9(C), pages 39-56.
    6. Daniel K. Lew & Douglas M. Larson, 2011. "A Repeated Mixed Logit Approach to Valuing a Local Sport Fishery: The Case of Southeast Alaska Salmon," Land Economics, University of Wisconsin Press, vol. 87(4), pages 712-729.
    7. Steve Berry & Ahmed Khwaja & Vineet Kumar & Andres Musalem & Kenneth Wilbur & Greg Allenby & Bharat Anand & Pradeep Chintagunta & W. Hanemann & Przemek Jeziorski & Angelo Mele, 2014. "Structural models of complementary choices," Marketing Letters, Springer, vol. 25(3), pages 245-256, September.
    8. Abdul Pinjari & Chandra Bhat & David S. Bunch, 2013. "Workshop report: recent advances on modeling multiple discrete-continuous choices," Chapters,in: Choice Modelling, chapter 3, pages 73-90 Edward Elgar Publishing.
    9. Castro, Marisol & Bhat, Chandra R. & Pendyala, Ram M. & Jara-Díaz, Sergio R., 2012. "Accommodating multiple constraints in the multiple discrete–continuous extreme value (MDCEV) choice model," Transportation Research Part B: Methodological, Elsevier, vol. 46(6), pages 729-743.
    10. Bhat, Chandra R. & Castro, Marisol & Pinjari, Abdul Rawoof, 2015. "Allowing for complementarity and rich substitution patterns in multiple discrete–continuous models," Transportation Research Part B: Methodological, Elsevier, vol. 81(P1), pages 59-77.

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