A flexible nested logit model

Sergio DeSouza ()
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Sergio DeSouza: Universidade Federal do Ceara

Economics Bulletin, 2017, vol. 37, issue 4, 2854-2859

Abstract: This paper develops simple but flexible nested logit. The basic idea is to introduce heterogeneity in the key parameter driving substitution patterns in the nested logit model: the correlation between utilities. By doing so the model generates a flexible demand system, overcoming an undesirable property of the classic nested logit. It is also relatively easy to estimate and compute, properties that could prove useful to researchers and practitioners trying to avoid the operational costs (i.e. numerical difficulties) of the general Random Coefficient model.

Keywords: Demand estimation; discrete-choice models; flexible demand (search for similar items in EconPapers)
JEL-codes: D4 L1 (search for similar items in EconPapers)
Date: 2017-12-28
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