Industrial location modeling: Extending the random utility framework

• Type: Article in International Scientific Journal
• Date: 2004

Authors

Octávio Figueiredo (Author) FEP; Paulo Guimaraes (Author) FEP; Douglas Woodward (Author) Other

Journal

Title: Journal of Regional Science

Vol. 44 No. 1

Pages: 1-20

ISSN: 0022-4146

Publisher: Wiley-Blackwell

Indexing

ISI Web of Knowledge - 111 Citations

ISI Web of Science

Scopus - 115 Citations

Scientific classification

FOS: Social sciences > Other social sciences

CORDIS: Social sciences > Economics

Other information

Authenticus ID: P-000-BTT

DOI: 10.1111/j.1085-9489.2004.00325.x

Abstract (EN): Given sound theoretical underpinnings, the random utility maximization-based conditional logit model (CLM) serves as the principal method for applied research on industrial location decisions. Studies that implement this methodology, however, confront several problems, notably the disadvantages of the underlying Independence of Irrelevant Alternatives (IIA) assumption. This paper shows that by taking advantage of an equivalent relation between the CLM and Poisson regression likelihood functions one can more effectively control for the potential IIA violation in complex choice scenarios where the decision maker confronts a large number of narrowly defined spatial alternatives. As demonstrated here our approach to the IIA problem is compliant with the random utility (profit) maximization framework.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 20