A Note on Stochastic Complementarity for the Applied Researcher

Research output: Contribution to journalArticle (Academic Journal)peer-review

Abstract

In their discussion of stochastic complementarity, Manzini et al. (2018) show that the intuitively appealing correlation criterion does not—in general—satisfy the axiom of monotonicity: products classified as complements can turn into substitutes following an increase in their joint purchases. In this note, we show that, however, by restricting attention to mixed logit models along the lines of Gentzkow (2007)’s, one can prevent such violations.
Original languageEnglish
JournalEconomics Letters
Publication statusAccepted/In press - 22 Nov 2020

Structured keywords

  • ECON Microeconomic Theory
  • ECON Econometrics

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