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

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.

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Year of publication:	2012
Authors:	Jaffe, Sonia ; Kominers, Scott Duke
Published in:	Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 116.2012, 1, p. 129-132
Publisher:	Elsevier
Subject:	Discrete choice \| Unit demand \| Separable demand \| Linear demand

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Type of publication:	Article
Classification:	C43 - Index Numbers and Aggregation ; D11 - Consumer Economics: Theory
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010572147