Home  Journals  Economic Analysis: Theory and Practice  39(438) - 2015 October

A review of structural discrete-continuous models of demand incorporating the multiple choice of consumers

Vol. 14, Iss. 39, OCTOBER 2015

Article PDF Version

Received: 10 August 2015

Received in revised form: 9 September 2015

Accepted: 16 September 2015

Available online: 25 October 2015

Subject Heading: MATHEMATICAL METHODS AND MODELS

JEL Classification: 

Pages: 56-66

Subject The need to model and estimate the demand function continues to be relevant. Structural discrete-continuous models of demand appeared in 2000. They enable to provide a mathematical description of choice situations.
     Objectives The objectives are to analyze the existing structural discrete-continuous models of demand, which allow simulating multiple choice of the individual, to compare different models and reveal the most topical areas for future research.
     Results I present a common approach to modeling the multiple choice situations, i.e. formalize the problem of consumer choice. The study includes a critical analysis of the models, considers the existing utility function specifications, and demonstrates their main advantages and disadvantages.
     Conclusions I propose two major areas for future research in this sphere: developing the flexible specifications of the utility function, which make it possible to consider the effects of substitution and complementarity, and designing the algorithms, which enable prompt estimation of such models.

Keywords: multiple choice, discrete-continuous model, demand, structural approach, utility function

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