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A Representative Consumer Framework for Discrete Choice Models with Endogenous Total Demand


  • Yukihiro Kidokoro

    (National Graduate Institute for Policy Studies)


Standard discrete choice models correspond to 'partial' utility maximization in which the controlled total is determined exogenously; typically, consumers are assumed to demand at most one unit. The purpose of this paper is to formulate a model in which discrete choice models are incorporated consistently into the full utility maximization framework and to establish a theoretical foundation for discrete choice models that assume no a priori controlled total. We derive the form of the corresponding indirect utility function of a representative consumer and the own-price and cross-price elasticities, and develop a method for measuring welfare, clarifying their implications.

Suggested Citation

  • Yukihiro Kidokoro, 2007. "A Representative Consumer Framework for Discrete Choice Models with Endogenous Total Demand," GRIPS Discussion Papers 07-07, National Graduate Institute for Policy Studies, revised Nov 2008.
  • Handle: RePEc:ngi:dpaper:07-07

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    References listed on IDEAS

    1. DE PALMA, André & KILANI, Karim, 2003. "(Un)conditional distribution of compensating variation in discrete choice models," CORE Discussion Papers 2003100, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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    More about this item


    Discrete choice; representative consumer; endogenous demand; logit model; generalized extreme value model;

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis


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