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Licensed Unlicensed Requires Authentication Published by De Gruyter December 21, 2010

Linear Demand Systems are Inconsistent with Discrete Choice

Sonia Jaffe and E. Glen Weyl

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.

Published Online: 2010-12-21

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