When Can a Demand System Be Described by a Multinomial Logit with Income Effect?
20 Pages Posted: 2 Jun 2016
Date Written: May 31, 2016
We show that a wide class of demand systems for differentiated products, such as those generated by additive preferences, indirectly additive preferences, and Kimball-like homothetic preferences, can be given a multinomial logit foundation provided that the conditional indirect utility is nonlinear and varies with the whole price array.
Keywords: discrete choice, multinomial logit, demand systems, additive preferences, homothetic preferences
JEL Classification: D43, L11, L13
Suggested Citation: Suggested Citation