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Generalized entropy models

Fosgerau, Mogens and de Palma, André (2015): Generalized entropy models.

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We formulate a family of direct utility functions for the consumption of a differentiated good. The family is based on a generalization of the Shannon 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.

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