nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2018‒05‒21
two papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Recreational Value of the Baltic Sea: a Spatially Explicit Site Choice Model Accounting for Environmental Conditions By Mikołaj Czajkowski; Marianne Zandersen; Uzma Aslam; Ioannis Angelidis; Thomas Becker; Wiktor Budziński; Katarzyna Zagórska
  2. Sufficient Statistics for Unobserved Heterogeneity in Structural Dynamic Logit Models By Victor Aguirregabiria; Jiaying Gu; Yao Luo

  1. By: Mikołaj Czajkowski (Faculty of Economic Sciences, University of Warsaw); Marianne Zandersen (Department of Environmental Science, Aarhus University); Uzma Aslam (Department of Environmental Science, Aarhus University; Iqra University Islamabad Campus); Ioannis Angelidis (Department of Environmental Science, Aarhus University); Thomas Becker (Department of Environmental Science, Aarhus University); Wiktor Budziński (Faculty of Economic Sciences, University of Warsaw); Katarzyna Zagórska (Faculty of Economic Sciences, University of Warsaw)
    Abstract: The Baltic Sea plays a significant role for recreational use in the nine littoral countries with more than 70% of the population visiting the coast, representing some 80 million recreation visits annually. Understanding the values associated with coastal recreation and the potential welfare changes of improving the state of the Baltic Sea is important for managing the marine environment. We estimate a spatially explicit travel cost model of coastal site recreation to the Baltic Sea to assess the welfare of accessing individual sites, identify recreational hotspots and simulate the welfare changes resulting from improving environmental and infrastructure conditions. The total benefits associated with the Baltic Sea based recreation amount to 11.4 billion EUR per year with significant variation across sites. Improving water quality and infrastructure boost the recreational value by nearly 9 billion EUR, almost doubling the recreational benefits compared to current conditions.
    Keywords: Recreational benefits, Site choice, Random Utility Model, Baltic Sea, Blue Flag
    JEL: L83 Q26 Q51
    Date: 2018
  2. By: Victor Aguirregabiria; Jiaying Gu; Yao Luo
    Abstract: We study the identification and estimation of structural parameters in dynamic panel data logit models where decisions are forward-looking and the joint distribution of unobserved heterogeneity and observable state variables is nonparametric, i.e., fixed-effects model. We consider models with two endogenous state variables: the lagged decision variable, and the time duration in the last choice. This class of models includes as particular cases important economic applications such as models of market entry-exit, occupational choice, machine replacement, inventory and investment decisions, or dynamic demand of differentiated products. The identification of structural parameters requires a sufficient statistic that controls for unobserved heterogeneity not only in current utility but also in the continuation value of the forward-looking decision problem. We obtain the minimal sufficient statistic and prove identification of some structural parameters using a conditional likelihood approach. We apply this estimator to a machine replacement model.
    Date: 2018–05

This nep-dcm issue is ©2018 by Edoardo Marcucci. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.