nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2011‒11‒07
three papers chosen by
Philip Yu
Hong Kong University

  1. How Do You Pay? The Role of Incentives at the Point-of-Sale By Carlos Arango; Kim Huynh; Leonard Sabetti
  2. Location choice in low-income countries : evidence from Japanese investments in East Asia By Hayakawa, Kazunobu; Tsubota, Kenmei
  3. The Rich or the Poor: Who Gains from Public Education Spending in Ghana? By Mawuli Gaddah; Alistair Munro

  1. By: Carlos Arango; Kim Huynh; Leonard Sabetti
    Abstract: This paper uses discrete-choice models to quantify the role of consumer socioeconomic characteristics, payment instrument attributes, and transaction features on the probability of using cash, debit card, or credit card at the point-of-sale. We use the Bank of Canada 2009 Method of Payment Survey, a two-part survey among adult Canadians containing a detailed questionnaire and a three-day shopping diary. We find that cash is still used intensively at low value transactions due to speed, merchant acceptance, and low costs. Debit and credit cards are used more frequently for higher transaction values where safety, record keeping, the ability to delay payment and credit card rewards gain prominence. We present estimates of the elasticity of using a credit card with respect to credit card rewards. Reward elasticities are a key element in understanding the impact of retail payment pricing regulation on consumer payment instrument usage and welfare.
    Keywords: Bank notes; Econometric and statistical methods; Financial services
    JEL: E41 C35
    Date: 2011
  2. By: Hayakawa, Kazunobu; Tsubota, Kenmei
    Abstract: Unlike most existing studies, this paper examines the location choices of MNEs in developing countries. Specifically, we investigate the location choices of Japanese MNEs among East Asian developing countries by estimating a four-stage nested logit model at the province level. Noteworthy results of location elements are as follows. As is consistent with the mechanics of cheap labor-seeking FDI, Japanese MNEs are more likely to invest in locations with low income and low tariff rates on products from Japan. Also, accessibility to other locations and/or ports matters in attracting Japanese MNEs because it is crucial in importing materials and exporting their products. In addition, WTO membership and bilateral investment treaties are important because these contribute to the settlement of trade and investment disputes, which is more likely to be necessary in developing countries.
    Keywords: Southeast Asia, China, Japan, Malaysia, Indonesia, Cambodia, Laos, Myanmar, Vietnam, Thailand, Philippines, Foreign investments, Industrial management, Location Choice, Multinational Firms, Nested-logit Model
    JEL: F15 F21 F23
    Date: 2011–07
  3. By: Mawuli Gaddah; Alistair Munro (National Graduate Institute for Policy Studies)
    Abstract: This paper examines the incidence of public education subsidies in Ghana. Since the late 1990s, Ghana’s government has increasingly recognised human capital as a cornerstone to alleviating poverty and income inequality, causing dramatic increases of government expenditures to the education sector. At the same time user fees have been introduced in higher education while basic education is being made progressively free. The question then is, whether these spending increases have been effective in reaching the poor and to what extent? What factors influence the poor’s participation in the public school system? We attempt to address these issues, employing the standard benefit incidence methods and the willingness-to-pay method using a nested multinomial logit model. The results give a clear evidence of progressivity with consistent ordering: pre- schooling and primary schooling are the most progressive, followed by secondary, and then tertiary. The poorest quintile gains 14.8% of total education benefts in 2005 compared to the richest quintile benefit of 26.3%. Own price and income elasticities are higher for private schools than public schools and for secondary than basic schools.
    Date: 2011–10

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