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When Can A Demand System Be Described By A Multinomial Logit With Income Effect?

Author

Listed:
  • Jacques-Francois Thisse
  • Philip Ushchev

    (National Research University Higher School of Economics)

Abstract

We show that a wide class of demand systems for dierentiated products, such as those generated by additive preferences, indirectly additive preferences, and Kimball-like homothetic preferences, can be given a multinomial logit foundation provided that the conditional indirect utility is nonlinear and varies with the whole price array.

Suggested Citation

  • Jacques-Francois Thisse & Philip Ushchev, 2016. "When Can A Demand System Be Described By A Multinomial Logit With Income Effect?," HSE Working papers WP BRP 139/EC/2016, National Research University Higher School of Economics.
    • Handle: RePEc:hig:wpaper:139/ec/2016
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    File URL: https://www.hse.ru/data/2016/06/01/1130394265/139EC2016.pdf
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    References listed on IDEAS

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    Cited by:

    1. Redding, Stephen J. & Weinstein, David E., 2016. "A unified approach to estimating demand and welfare," LSE Research Online Documents on Economics 67681, London School of Economics and Political Science, LSE Library.
    2. Federico Etro, 2023. "Hybrid Marketplaces with Free Entry of Sellers," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 62(2), pages 119-148, March.
    3. Colin J. Hottman & Ryan Monarch, 2018. "Estimating Unequal Gains across U.S. Consumers with Supplier Trade Data," Working Papers 18-04, Center for Economic Studies, U.S. Census Bureau.
    4. Matveenko, Andrei, 2020. "Logit, CES, and rational inattention," Economics Letters, Elsevier, vol. 186(C).
    5. Beck, Günter W. & Lein, Sarah M., 2020. "Price elasticities and demand-side real rigidities in micro data and in macro models," Journal of Monetary Economics, Elsevier, vol. 115(C), pages 200-212.
    6. Stephen J Redding & David E Weinstein, 2020. "Measuring Aggregate Price Indices with Taste Shocks: Theory and Evidence for CES Preferences," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(1), pages 503-560.
    7. Fally, Thibault, 2022. "Generalized separability and integrability: Consumer demand with a price aggregator," Journal of Economic Theory, Elsevier, vol. 203(C).
    8. Behrens, Kristian & Murata, Yasusada, 2021. "On quantitative spatial economic models," Journal of Urban Economics, Elsevier, vol. 123(C).
    9. Etro, Federico, 2017. "Research in economics and monopolistic competition," Research in Economics, Elsevier, vol. 71(4), pages 645-649.
    10. Lashkaripour, Ahmad, 2020. "Discrete trade," Journal of International Economics, Elsevier, vol. 126(C).

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    More about this item

    Keywords

    discrete choice; multinomial logit; demand systems; additive preferences; homothetic preferences;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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