On the Equivalence of Location Choice Models: Conditional Logit, Nested Logit and Poisson

Brülhart, Marius and Kurt Schmidheiny
Authors registered in the RePEc Author Service: Marius Brülhart

No 7379, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: It is well understood that the two most popular empirical models of location choice - conditional logit and Poisson - return identical coefficient estimates when the regressors are not individual specific. We show that these two models differ starkly in terms of their implied predictions. The conditional logit model represents a zero-sum world, in which one region's gain is the other regions' loss. In contrast, the Poisson model implies a positive-sum economy, in which one region's gain is no other region's loss. We also show that all intermediate cases can be represented as a nested logit model with a single outside option. The nested logit turns out to be a linear combination of the conditional logit and Poisson models. Conditional logit and Poisson elasticities mark the polar cases and can therefore serve as boundary values in applied research.

Keywords: Conditional logit; Firm location; Nested logit; Poisson count model; Residential choice (search for similar items in EconPapers)
JEL-codes: C25 H73 R3 (search for similar items in EconPapers)
Date: 2009-07
New Economics Papers: this item is included in nep-ecm and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Related works:
Journal Article: On the equivalence of location choice models: Conditional logit, nested logit and Poisson (2011)
Working Paper: On the Equivalence of Location Choice Models: Conditional Logit, Nested Logit and Poisson (2009)
Working Paper: On the equivalence of location choice models: conditional logit, nested logit and poisson (2009)
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