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Discrete/Continuous Models of Consumer Demand
W. Michael Hanemann
Abstract
This paper develops a unified framework for formulating econometric models of discrete/continuous consumer choices in which the discrete and continuous choices both flow from the same underlying (random) utility maximization decision. As a special case a number of models suitable for empirical application are developed where the discrete choice is among different brands of a commodity. Since these brands are essentially substitutes, the consumer prefers to buy only one brand at any time; discrete choice is which brand to select and the continuous choice is how many units to buy.
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