Discrete choice cannot generate demand that is additively separable in own price

Sonia Jaffe and Scott Kominers

Economics Letters, 2012, vol. 116, issue 1, 129-132

Abstract: We show that in a unit demand discrete choice framework with at least three goods, demand cannot be additively separable in own price. This result sharpens the analogous result of Jaffe and Weyl (2010) in the case of linear demand and has implications for testing of the discrete choice assumption, out-of-sample prediction, and welfare analysis.

Keywords: Discrete choice; Unit demand; Separable demand; Linear demand (search for similar items in EconPapers)
JEL-codes: C43 D11 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:116:y:2012:i:1:p:129-132

DOI: 10.1016/j.econlet.2012.01.013

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