On the equivalence of location choice models: conditional logit, nested logit and poisson

Kurt Schmidheiny and Marius Brülhart

No 2009/14, Working Papers from Institut d'Economia de Barcelona (IEB)

Abstract: It is well understood that the two most popular empirical models of location choice-conditional logit and Poisson - return identical coefficient estimates when the regressors are not individual specific. We show that these two models differ starkly in terms of their implied predictions. The conditional logit model represents a zero-sum world, in which one region's gain is the other regions' loss. In contrast, the Poisson model implies a positive-sum economy, in which one region's gain is no other region's loss. We also show that all intermediate cases can be represented as a nested logit model with a single outside option. The nested logit turns out to be a linear combination of the conditional logit and Poisson models. Conditional logit and Poisson elasticities mark the polar cases and can therefore serve as boundary values in applied research.

Keywords: firm location; residential choice; conditional logit; nested logit; Poisson count model (search for similar items in EconPapers)
JEL-codes: C25 H73 R3 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: On the equivalence of location choice models: Conditional logit, nested logit and Poisson (2011)
Working Paper: On the Equivalence of Location Choice Models: Conditional Logit, Nested Logit and Poisson (2009)
Working Paper: On the Equivalence of Location Choice Models: Conditional Logit, Nested Logit and Poisson (2009)
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