Generalized entropy models

Mogens Fosgerau (1) , André de Palma (2)

1 DTU - Danmarks Tekniske Universitet = Technical University of Denmark
2 CES - Centre d'économie de la Sorbonne

We formulate a family of direct utility functions for the consumption of a differentiated good. This family is based on a generalization of the Shan-non entropy. It includes dual representations of all additive random utility discrete choice models, as well as models in which goods are complements. Demand models for market shares can be estimated by plain regression, enabling the use of instrumental variables. Models for microdata can be estimated by maximum likelihood.

Mots clés: market shares; product differentiation; discrete choice; duality; generalized entropy; C25; L1

Domaines: Économie et finance quantitative [q-fin]; Gestion des risques [q-fin.RM]

Mogens Fosgerau, André de Palma. Generalized entropy models. 2016. ⟨hal-01291347v2⟩