The B.E. Journal of Theoretical Economics
Editor-in-Chief: Schipper, Burkhard
Ed. by Fong, Yuk-fai / Peeters, Ronald / Puzzello , Daniela / Rivas, Javier
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Linear Demand Systems are Inconsistent with Discrete Choice
Citation Information: The B.E. Journal of Theoretical Economics. Volume 10, Issue 1, ISSN (Online) 1935-1704, DOI: 10.2202/1935-1704.1729, December 2010
- Published Online:
We show that with more than two options, a discrete choice model cannot generate linear demand. In doing so, we demonstrate a prediction of such discrete choice models that is falsifiable based on local second-order properties of demand.
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