On the Equivalence of Location Choice Models: Conditional Logit, Nested Logit and Poisson

By Kurt Schmidheiny, Marius Brülhart. Social Science Research Network, 2011

234 citations recorded by the source corpus.

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.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/6ea408d82ac6fad72bb3742dfe6032f78f37375d

Citations in the corpus

• A practitioners' guide to gravity models of international migration (2016, unknown): “One can rely on the fact that s 2 (0,1] and that the elasticities are monotonic functions of s to construct bounds for the elasticities of interest, following Schmidheiny and Br€ulhart (2011).”