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.
|Number of pages||3|
|Early online date||6 Jan 2021|
|Publication status||Published - Feb 2021|
- ECON Microeconomic Theory
- ECON Econometrics
- Demand for bundles
- Mixed-logit model
- Monotonicity axiom
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Dr Alessandro Iaria
- School of Economics - Senior Lecturer in Economics