Discrete Choice Cannot Generate Demand that is Additively Separable in Own Price

10 Pages Posted: 27 Jan 2012

See all articles by Sonia Jaffe

Sonia Jaffe

University of Chicago

Scott Duke Kominers

Harvard University; a16z crypto

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

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

Sonia Jaffe (Contact Author)

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

Scott Duke Kominers

Harvard University ( email )

Rock Center
Harvard Business School
Boston, MA 02163
United States

HOME PAGE: http://www.scottkom.com/

a16z crypto ( email )

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
154
Abstract Views
974
Rank
353,029
PlumX Metrics