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Sergio Aquino DeSouza
''A flexible nested logit model''
( 2017, Vol. 37 No.4 )
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
JEL: L1 - Market Structure, Firm Strategy, and Market Performance: General
D4 - Market Structure and Pricing: General
Manuscript Received : Oct 18 2017 Manuscript Accepted : Dec 28 2017

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