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Implications of Model Specification for Welfare Estimation in Nested Logit Models (The)


  • Kling, Catherine L.
  • Thomson, Cynthia J.


Nested logit models are increasingly being used to value environmental amenities. The implications of nesting structure, choice of estimator (FIML or sequential), and restrictions on parameters across nested groups on welfare estimates are examined. These issues have received little previous attention. Model selection criteria that can be used to distinguish among the models are extended and applied. Additionally, a simulation procedure is implemented to construct standard errors for the welfare measures.

Suggested Citation

  • Kling, Catherine L. & Thomson, Cynthia J., 1996. "Implications of Model Specification for Welfare Estimation in Nested Logit Models (The)," Staff General Research Papers Archive 1599, Iowa State University, Department of Economics.
  • Handle: RePEc:isu:genres:1599

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    References listed on IDEAS

    1. Sheldon, Ian M. & von Witzke, Harald, 1992. "On the Economics of Food Quality Standards and Integration in the European Community," Occasional Papers 233072, Regional Research Project NC-194: Organization and Performance of World Food Systems.
    2. Appelbaum, Elie, 1982. "The estimation of the degree of oligopoly power," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 287-299, August.
    3. Sullivan, Daniel, 1985. "Testing Hypotheses about Firm Behavior in the Cigarette Industry," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 586-598, June.
    4. Carol Horton Tremblay & Victor J. Tremblay, 1995. "The Impact Of Cigarette Advertising On Consumer Surplus, Profit, And Social Welfare," Contemporary Economic Policy, Western Economic Association International, vol. 13(1), pages 113-124, January.
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