A Tractable Approach to the Firm Location Decision Problem

• Type: Article in International Scientific Journal
• Date: 2003

Authors

Paulo Guimaraes (Author) Other; Figueirdo, O (Author) Other; Woodward, D (Author) Other

Journal

Title: Review of Economics and Statistics

Vol. 85 No. 1

Pages: 201-204

ISSN: 0034-6535

Publisher: MIT Press

Indexing

ISI Web of Knowledge - 82 Citations

Scopus - 97 Citations

Other information

Authenticus ID: P-00H-ZVB

DOI: 10.1162/003465303762687811

Abstract (EN): The conditional logit model based on random utility maximization has provided an adequate framework to model firm location decisions. However, in practice, the implementation of this methodology presents problems when one has to handle complex choice scenarios with a large number of spatial alternatives. We posit the Poisson regression as a tractable solution to these problems. We demonstrate that by taking advantage of an equivalence relation between the likelihood function of the conditional logit and the Poisson regression we can, under certain circumstances, easily estimate a conditional logit model regardless of the number of choices. This insight should be particularly useful for studies of economic location.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 4