nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2008‒03‒08
six papers chosen by
Philip Yu
Hong Kong University

  1. Hybrid Consumption Paths in the Attribute Space: A Model and Application with Scanner Data By Sergi Jiménez-Martín; Antonio Ladron-de-Guevara Martinez
  2. Dynamic policy analysis By Jaap Abbring; James Heckman
  3. Choice Valuation of Traffic Restrictions: Perspectives on Noise, Pollution and Congestion Preferences By Carlos Pestana Barros; Peter Dieke
  4. Temporary jobs: Port of entry, Trap, or just Unobserved Heterogeneity? By Fabio Berton; Francesco Devicienti; Lia Pacelli
  5. A Permit Allocation Contest for a Tradable Pollution Permit Market By Ian A. MacKenzie,; Nick Hanley; Tatiana Kornienko
  6. On the Sequential Choice of Tradable Permit Allocations By Ian A. MacKenzie,

  1. By: Sergi Jiménez-Martín; Antonio Ladron-de-Guevara Martinez
    Abstract: This paper presents a dynamic choice model in the attribute space considering rational consumers. In light of the evidence of several state-dependence patterns, the standard attribute-based model is extended by considering a general utility function where pure inertia and pure variety-seeking behaviors can be explained in the model as particular linear cases. The dynamics of the model are fully characterized by standard dynamic programming techniques. The model presents a stationary consumption pattern that can be inertial, where the consumer only buys one product, or a variety-seeking one, where the consumer shifts among varied products. We run some simulations to analyze the consumption paths out of the steady state. Under the hybrid utility assumption, the consumer behaves inertially among the unfamiliar brands for several periods, eventually switching to a variety-seeking behavior when the stationary levels are approached. An empirical illustration is run using scanner databases for three different product categories: fabric softener, saltine cracker, and catsup. Non-linear specifications provide the best fit of the data, as hybrid functional forms are found in all the product categories for most attributes and segments. These results reveal the statistical superiority of the non-linear structure and confirm the gradual trend to seek variety as the level of familiarity with the purchased items increases.
    Date: 2008–02
  2. By: Jaap Abbring (Institute for Fiscal Studies and Tinbergen Institute); James Heckman (Institute for Fiscal Studies and University of Chicago)
    Abstract: <p><p><p>This chapter studies the microeconometric treatment-effect and structural approaches to dynamic policy evaluation. First, we discuss a reduced-form approach based on a sequential randomization or dynamic matching assumption that is popular in biostatistics. We then discuss two complementary approaches for treatments that are single stopping times and that allow for non- trivial dynamic selection on unobservables. The first builds on continuous-time duration and event-history models. The second extends the discrete-time dynamic discrete-choice literature.</p></p></p></p></p>
    Date: 2008–02
  3. By: Carlos Pestana Barros; Peter Dieke
    Abstract: This paper focuses on the choice valuation of traffic restrictions while entering Lisbon city based on individual preferences for noise, pollution and congestion. The analysis employs a questionnaire distributed in 2007 to ascertain the significant characteristics of traveling to Lisbon, with the aim of curbing the number of cars that enter the city daily. A random parameter logit model is used to analyze the characteristics (e.g. individual characteristics, motivations, type of transport used) that are associated with the probability of individuals supporting a fee on private cars entering the city. The model also takes into account the uncontrolled heterogeneity of the data. Some policy implications are also presented.
    Keywords: Transportation; Lisbon; Mixed Logit Model; Public Policy.
    Date: 2008–02
  4. By: Fabio Berton; Francesco Devicienti; Lia Pacelli
    Abstract: We use a 1998 - 2004 sample from WHIP in order to study the labor market transitions of young entrants. We consider seven labor market tates: permanent and temporary employment, apprenticeship, training pogrammes, self employment, quasi subordinate jobs and unemployment. After controlling for individual ?xed e¤ects in a dynamic multinomial logit framework, we ?nd that heterogeneity partially explains workers' sorting among the contracts. State dependence exists in all the labor market states, but CFLs, apprenticeship and temporary jobs also represent a port of entry towards permanent employment. Length: 22 pages
    Keywords: temporary jobs, port of entry, state dependence
    Date: 2007
  5. By: Ian A. MacKenzie, (CER-ETH Center of Economic Research at ETH Zurich, Switzerland); Nick Hanley (Department of Economics, University of Stirling, Stirling, UK); Tatiana Kornienko (Department of Economics, University of Edinburgh, Edinburgh, UK)
    Abstract: In this paper we advocate a new initial allocation mechanism for a tradable pollution permit market. We outline a Permit Allocation Contest (PAC) that distributes permits to firms based on their rank relative to other firms. This ranking is achieved by ordering firms based on an observable 'external action' where the external action is an activity or characteristic of the firm that is independent of their choice of emissions in the tradeable permit market. We show that this mechanism efficiently allocates permits and, as a result, the tradeable permit market is cost-effective. We determine the symmetric equilibrium strategy of each firm in choosing their external action and find the choice is influenced by the firm's cost structure and the regulator's choice of permit allocation schedule (distribution of permits to the market). Furthermore, we investigate the factors that determine the regulator's choice of optimal permit allocation schedules.
    Keywords: Rank-order contests, pollution permits, initial allocation
    JEL: D44 Q25
    Date: 2008–03
  6. By: Ian A. MacKenzie, (CER-ETH Center of Economic Research at ETH Zurich, Switzerland)
    Abstract: This paper investigates the sequential announcement of domestic emissions caps by regulators in a federal or international-based tradable pollution permit market for a transboundary pollutant. A leader-follower framework is used to analyse the consequences of regulators sequentially announcing domestic allocation caps. We find the sequential choice of domestic allocation caps is sub-optimal and depends on the follower's reaction to the leader's choice. Furthermore, the marginal damage and the degree to which allocations are substitutes or complements affects whether the leader changes from being a net permit buyer (seller) of permits to a seller (buyer).
    Keywords: Initial allocation, international tradable permit market, leader-follower
    JEL: D78 L13 Q28
    Date: 2008–03

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