The Spatial Distribution of Retail Expenditures: Joint Estimation of a Polychotomous Discrete-Continuous Choice System.

Abstract

A polychotomous discrete-continuous choice system of the spatial distribution of retail expenditures is jointly estimated which allows the imposition of cross-equation restrictions between functions describing discrete and continuous choices as implied by economic theory. The empirical model fuses the shopping destination choices made by individuals with shopping expenditure decisions. The econometric and empirical model offers a rich insight into shopping behaviour and demonstrates the benefits of joint estimation of discrete-continuous choices in contrast to sequential estimation. The approach has wide applicability to many problems involving discrete and continuous choices which are jointly determined.