The Use of Linear Logit Models for Dynamic Input Demand Systems
- 1 August 1984
- journal article
- research article
- Published by JSTOR in The Review of Economics and Statistics
- Vol. 66 (3) , 434-443
- https://doi.org/10.2307/1924999
Abstract
This paper demonstrates that a linear logit model, with appropriate constraints, can be used to specify a system of cost share equations that satisfy neoclassical economic conditions. Unlike many other flexible functional forms, the logistic function is particularly well suited for incorporating dynamic adjustment mechanisms. The empirical results suggest that the use of static models overstates short-run own-price elasticities and understates the corresponding long-run price effects.Keywords
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