nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2006‒07‒21
four papers chosen by
Philip Yu
Hong Kong University

  1. Comparing Tax and Tax Reallocations Payments in Financing Rail Noise Abatement Programs: Results from a CE valuation study in Italy By Paulo A.L.D. Nunes; Chiara M. Travisi
  2. What money buys: clients of street sex workers in the US By Della Giusta, Marina; Di Tommaso, Maria Laura; Shima, Isilda; Strøm, Steinar
  3. Innovation and market dynamics in the EPO market By Sorisio, Enrico; Strøm, Steinar
  4. Air Travel Choices in Multi-Airport Markets By Jun Ishii; Sunyoung Jun; Kurt Van Dender

  1. By: Paulo A.L.D. Nunes (Ca’ Foscari University of Venice and Fondazione Eni Enrico Mattei); Chiara M. Travisi (Politecnico of Milano and Fondazione Eni Enrico Mattei)
    Abstract: The paper examines the use of choice experiments (CE) to assess the economic value of alternative rail noise reduction interventions on the so-called Brennero railway, Italy. The novelty of this paper is threefold. To our knowledge, this is the first study on the valuation of noise conducted in Italy and it is the first example of CE applied in the field of rail noise valuation. Second, we consider not only the economic value assessment of noise reduction but also how this reduction is achieved, ranging from policy instruments such as barriers or train technology. Third, the paper provides an original contribution in the valuation literature since we test formally the econometric robustness of the CE estimates under three payment vehicles. In fact, we consider (a) a special regional tax, (b) reallocation of financial resource within the provincial budget on the public transport sector, and (c) reallocation of financial resource of the provincial budget from the administration and entertainment sector. Test results are mixed. Welfare analysis and policy implications of valuing rail noise reduction programs using different payment vehicles are discussed.
    Keywords: Choice Experiment, Noise Abatement, Tax, Tax Reallocation, Formal Testing, Welfare Analysis
    JEL: C0 R41
    Date: 2006–06
  2. By: Della Giusta, Marina (University of Reading Business School); Di Tommaso, Maria Laura (University of Turin, Department of Economics "S. Cognetti de Martiis"); Shima, Isilda (University of Turin, Department of Economics "S. Cognetti de Martiis"); Strøm, Steinar (Dept. of Economics, University of Oslo)
    Abstract: An econometric model that explores the effect of personal characteristics and attitudes of clients on their demand for prostitution is estimated on data from a survey of clients of street sex workers in the US. The results reveal that clients of street sex workers in our sample have two diametrically opposite profiles: one for clients who declared never to have been with a sex worker or to have been only once, whom we label “experimenters”, and one for the more experienced ones that we name “regulars”. The experimenters correspond to a more machist type, with negative views of women, and of sex workers (who are believed to be different from other women but condemned at the same time), and viewing prostitution as a complement to stable relationships. The regulars have more liberal view of women, and of sex workers, the more they dislike control the more they demand, they like variety. Their demand also increases with age and with having a permanent job, which may indicate a positive income effect. These appear to be men who are happy to satisfy their sexual wants through sex workers, which they prefer to relationships. The users of condoms seem to fit the profile of the regulars, whereas the non-users fit that of the experimenters.
    Keywords: Demand for sex; ordered logit; factor analysis; US data.
    JEL: C35 D12
    Date: 2006–07–10
  3. By: Sorisio, Enrico (Neuroscienze PharmaNess scarl); Strøm, Steinar (Dept. of Economics, University of Oslo)
    Abstract: We have estimated the demand of erythropoietin (EPO) on market data from the Nordic countries. Assuming that prices are set in a Nash-Bertrand game we determine the degree of competition in this Nordic market. We also report the impact of product innovation on welfare, e.g on consumer and producer surplus. The product innovation is the entry of Aranesp in the Nordic market. We find a positive effect related to the introduction of Aranesp in the EPO market. The high increase in consumer surplus however seems not to be accompanied by a great increase in producer surplus, whose growth is slight. Some time after the introduction of the innovation, the surplus growth does not seem to increase, it remains more or less the same (or decreases a bit). An important conclusion in our paper is that although there are few firms competing in the Nordic market for EPO, the estimated long run market power is low.
    Keywords: Discrete choice; demand for pharmaceuticals; monopolistic competition; EPO
    JEL: C35 D43 I18 L11
    Date: 2006–06–09
  4. By: Jun Ishii (Department of Economics, University of California-Irvine); Sunyoung Jun (Department of Economics, University of California-Irvine); Kurt Van Dender (Department of Economics, University of California-Irvine)
    Abstract: We estimate a conditional logit model to measure the impact of airport and airline supply characteristics on the air travel choices of passengers departing from one of three San Francisco Bay area airports and arriving at one of four airports in greater Los Angeles in October 1995. Non-price characteristics like airport access time, airport delay, flight frequency, the availability of particular airport-airline combinations, and early arrival times are found to strongly affect choice probabilities. Marginal effects and counterfactual scenarios suggest that changes access in times affect travel choices more than changes in travel delays, and that the preferred airport differs by passenger type. In order to examine the robustness of the conditional logit model, we estimate a mixed logit model, and find that the results are similar. We attribute the similarity to our strictly defined travel market and to our distinction between leisure and business travelers, thus controlling for two important sources of consumer heterogeneity.
    Keywords: Airports; Airlines; Air travel demand; Discrete choice
    JEL: L11 L15 L93 R41
    Date: 2006–02

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