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

Author

Listed:
  • Felipe Vásquez

    (Departamento de Economía, Universidad de Concepción.)

  • Michael Hanemann

    (Department of Agricultural and Resource Economics,University of California, Berkeley)

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

  • 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.
    • Handle: RePEc:cnc:wpaper:08-2009
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    Cited by:

    1. Chandra Bhat & Abdul Pinjari, 2014. "Multiple discrete-continuous choice models: a reflective analysis and a prospective view," Chapters, in: Stephane Hess & Andrew Daly (ed.), Handbook of Choice Modelling, chapter 19, pages 427-454, Edward Elgar Publishing.
    2. 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.
    3. Abdul Pinjari & Chandra Bhat & David S. Bunch, 2013. "Workshop report: recent advances on modeling multiple discrete-continuous choices," Chapters, in: Stephane Hess & Andrew Daly (ed.), Choice Modelling, chapter 3, pages 73-90, Edward Elgar Publishing.
    4. 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.
    5. Pinjari, Abdul Rawoof & Bhat, Chandra, 2021. "Computationally efficient forecasting procedures for Kuhn-Tucker consumer demand model systems: Application to residential energy consumption analysis," Journal of choice modelling, Elsevier, vol. 39(C).

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