Download This PaperDiscrete Choice Cannot Generate Demand that is Additively Separable in Own Price
10 Pages Posted: 27 Jan 2012
Date Written: February 6, 2011
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 predictions, and welfare analysis.
Keywords: discrete choice, linear demand
JEL Classification: C43, D11
Suggested Citation: Suggested Citation
Jaffe, Sonia and Kominers, Scott Duke, Discrete Choice Cannot Generate Demand that is Additively Separable in Own Price (February 6, 2011). Available at SSRN: https://ssrn.com/abstract=1992031 or http://dx.doi.org/10.2139/ssrn.1992031
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