Discrete choice models with capacity constraints: an empirical analysis of the housing market of the greater Paris region

André de Palma (), Nathalie Picard () and Paul Waddell ()
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Paul Waddell: University of Washington at Seattle, Department of Urban Design and Planning

No 2007-04, THEMA Working Papers from THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise

Abstract: Discrete choice models are based on the idea that each user can choose both freely and independently from other users in a given set of alternatives. But this is not the case in several situations. In particular, limitations and interactions can occur when the number of available products of one type is smaller than the total demand for this type. As a consequence, some individuals can be denied their preferred choice. We develop a methodology to address those constraints and we apply it to residential location choice, where our empirical data suggest that availability constraints may bias actual choices. The analysis provides some theoretical developments and elaborates an iterative procedure for estimating demand in the presence of capacity constraints. The empirical application relies on the location choice model developed and estimated in [6] for Ile de France (Paris region) and generalizes it to integrate capacity constraints.

Keywords: Residential location; constrained Logit; capacity constraints; sampling; Ilede- France (search for similar items in EconPapers)
JEL-codes: C35 R21 R31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dcm, nep-geo and nep-ure
Date: 2007
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Journal Article: Discrete choice models with capacity constraints: An empirical analysis of the housing market of the greater Paris region (2007)
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Persistent link: http://EconPapers.repec.org/RePEc:ema:worpap:2007-04

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