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

Kurt Schmidheiny and Marius Brülhart

No 2726, CESifo Working Paper Series from CESifo

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)
JEL-codes: C25 H73 R30 (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo1_wp2726.pdf (application/pdf)

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)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_2726

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().