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Generalized entropy models

Author

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  • Mogens Fosgerau

    (DTU - Danmarks Tekniske Universitet = Technical University of Denmark)

  • André de Palma

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

Abstract

We formulate a family of direct utility functions for the consumption of a differentiated good. This family is based on a generalization of the Shan-non entropy. It includes dual representations of all additive random utility discrete choice models, as well as models in which goods are complements. Demand models for market shares can be estimated by plain regression, enabling the use of instrumental variables. Models for microdata can be estimated by maximum likelihood.

Suggested Citation

  • Mogens Fosgerau & André de Palma, 2016. "Generalized entropy models," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01291347, HAL.
    • Handle: RePEc:hal:cesptp:hal-01291347
    Note: View the original document on HAL open archive server: https://enpc.hal.science/hal-01291347v2
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    Cited by:

    1. Fosgerau, Mogens & Melo, Emerson & Shum, Matt, 2017. "Discrete Choice and Rational Inattention: a General Equivalence Result�," MPRA Paper 76605, University Library of Munich, Germany.
    2. André de Palma & Julien Monardo, 2017. "The General Nesting Logit (GNL) Model using Aggregate Data," Working Papers hal-01552455, HAL.
    3. Lindbeck, Assar & Weibull, Jörgen, 2020. "Delegation of investment decisions, and optimal remuneration of agents," European Economic Review, Elsevier, vol. 129(C).
    4. Khai Xiang Chiong & Matthew Shum, 2019. "Random Projection Estimation of Discrete-Choice Models with Large Choice Sets," Management Science, INFORMS, vol. 65(1), pages 256-271, January.
    5. Mogens, Fosgerau, 2016. "A regression model of product differentiation," MPRA Paper 72786, University Library of Munich, Germany.

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    More about this item

    Keywords

    market shares; product differentiation; discrete choice; duality; generalized entropy ; C25; L1;
    All these keywords.

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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