nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2007‒06‒02
six papers chosen by
Philip Yu
Hong Kong University

  1. Demand for Bank Services and Market Power in Brazilian Banking By Márcio I. Nakane; Leonardo S. Alencar; Fabio Kanczuk
  2. Visualization of Competitive Market Structure by Means of Choice Data By Werner Kunz
  3. Participation of non-industrial private forest owners in National Forest Programmes: a discrete choice model for Northern Portugal By Américo M. S. Carvalho Mendes
  4. The Location of Domestic and Foreign Production Affiliates by French Multinational Firms By Mayer, Thierry; Méjean, Isabelle; Nefussi, Benjamin
  5. Testing the stability of the Benefit Transfer Function for Discrete Choice Contingent Valuation Data By David I. Matthews; Ricardo Scarpa; W. George Hutchinson
  6. Linking Recreation Demand and Willingness to Pay with the Inclusive Value: Valuation of Saginaw Bay Coastal Marsh By John C. Whitehead; Peter A. Groothuis; Rob Southwick

  1. By: Márcio I. Nakane; Leonardo S. Alencar; Fabio Kanczuk
    Abstract: We use bank-level data to model the demand for bank services in Brazil following the discrete choice literature. A multinomial logit specification is used to study the demand for time deposits, for an aggregate of demand and passbook savings deposits, and for loans. Market for each of these products is defined at the municipality level. In the supply side, we find the absolute price-cost margins consistent with Bertrand competition and with cartel. Our results suggest that even Bertrand competition overestimates the degree of market power in the Brazilian banking industry.
    Date: 2006–06
  2. By: Werner Kunz
    Abstract: This paper presents a method for visualizing competitive market structures based on scanner panel data where asymmetries are taken into account. For this, I combined consumer choice models based on mixed logit models with three-mode principal component analysis. This approach can be used to unfold a competitive market structure map. The methodology presented is able to quantify the clout and receptivity of various brands. The results can then be visualized over time. Using this approach, guidelines for promotional activities of new brands can be provided, and possible threats from the competition detected.
    Keywords: Three-mode PCA, elasticities, joint plots, market structure analysis.
    JEL: D49
    Date: 2007–05
  3. By: Américo M. S. Carvalho Mendes (Faculdade de Economia e Gestão, Universidade Católica Portuguesa (Porto))
    Abstract: In countries where private forest ownership is very important, knowledge of the behaviour of private forest owners is useful for the design and implementation of successful forest policies. This applies to Portugal where 86 % of the forest lands are private property. This paper presents a study carried out in a region of the Northern part of the country covered by a local forest owners’ association. Based on individual data about the members of this association concerning some of their characteristics (implementation of publicly subsidised afforestation projects, size of the forest holdings, number of forest holdings belonging to the same owner and distance between the permanent residence of the owner and his forest holdings), a multinomial logit model is estimated for the probabilities of participation on public incentive schemes to finance individual and grouped afforestation projects.
    Keywords: non industrial private forest owners, afforestation projects, public incentives
    Date: 2007–05
  4. By: Mayer, Thierry; Méjean, Isabelle; Nefussi, Benjamin
    Abstract: Economists explaining location choices of foreign affiliates usually focus on country-level determinants. Costs of production, the size of expected demand, proxies for agglomeration effects, and various policy-related incentives form the usual set of covariates. Two dimensions of those choices are usually omitted. Multinational enterprises (MNEs) usually have more than one affiliate abroad and they also continue to invest domestically during their international expansion. We add to the literature on location choice by accounting for i) the entire network of affiliates of each French MNE over the 1992-2002 period, and ii) the entire set of possible choices by including the home country. Our results show that the interdependence between affiliates of the same MNE matters a great deal for location, both for the choice between different foreign countries and for the choice between investing at home or abroad. Moreover, French firms' propensity to invest abroad is shown to be positively linked to their productivity and the size of their intangible assets.
    Keywords: conditional logit model; location choice; multinational firms
    JEL: F12 F15
    Date: 2007–05
  5. By: David I. Matthews (Agri-Food and Biosciences Institute); Ricardo Scarpa (University of Waikato); W. George Hutchinson (Queen’s University Belfast)
    Abstract: We examine the stability of the benefit transfer function across 42 recreational forests in the British Isles. A working definition of reliable function transfer is put forward, and a suitable statistical test is provided. The test is based on the sensitivity of the model log-likelihood to removal of individual forest recreation sites. We apply the proposed methodology on discrete choice contingent valuation data and find that a stable function improves our measure of transfer reliability, but not by much. We conclude that, in empirical studies on transferability, function stability considerations are secondary to the availability and quality of site attribute data. Modellers’ can study the advantages of transfer function stability vis-à-vis the value of additional information on recreation site attributes.
    Keywords: Benefit function transfer ; Function stability tests; Transfer reliability Forest recreation values; Contingent Valuation; Split sample
    JEL: Q26 H41 C25
    Date: 2007–05–25
  6. By: John C. Whitehead; Peter A. Groothuis; Rob Southwick
    Abstract: In this paper we propose an alternative model for linking revealed preference and stated preference models of recreation when a single travel cost measure is difficult to obtain. We show that this model can be used to test convergent validity and offers an alternative scope test that does not rely on split-sample contingent valuation scenarios. Our results are mixed. In three of four models the inclusive value is negatively related to the willingness to donate but unrelated to the willingness to pay. This result suggests that recreation nonusers hold nonuse values while recreation users do not hold nonuse values.
    Date: 2007

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