On the equivalence of location choice models: Conditional logit, nested logit and Poisson

Kurt Schmidheiny and Marius Brülhart

Journal of Urban Economics, 2011, vol. 69, issue 2, 214-222

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: Firm; location; Residential; choice; Conditional; logit; Nested; logit; Poisson; count; model (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (84)

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Related works:
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)
Working Paper: On the equivalence of location choice models: conditional logit, nested logit and poisson (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:juecon:v:69:y:2011:i:2:p:214-222

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