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  • July 2012
  • Article
  • Economics Letters

Discrete Choice Cannot Generate Demand That Is Additively Separable in Own Price

By: Sonia Jaffe and Scott Duke Kominers
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Abstract

We show that in a unit demand discrete choice framework with at least three goods, demand cannot be additively separable in own price. This result sharpens the analogous result of Jaffe and Weyl (2010) in the case of linear demand and has implications for testing of the discrete choice assumption, out-of-sample prediction, and welfare analysis.

Keywords

Discrete Choice; Unit Demand; Separable Demand; Linear Demand; Demand and Consumers; Market Design; Mathematical Methods; Economics

Citation

Jaffe, Sonia, and Scott Duke Kominers. "Discrete Choice Cannot Generate Demand That Is Additively Separable in Own Price." Economics Letters 116, no. 1 (July 2012): 129–132.

About The Author

Scott Duke Kominers

Entrepreneurial Management
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