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Re: st: nested logit tree

From   "Alvarez,Sergio" <>
To   <>
Subject   Re: st: nested logit tree
Date   Mon, 28 Nov 2011 11:02:27 -0500


I may be misunderstanding, but it looks like you want to model a decision which has only two possible outcomes: firm is a supplier or firm is a buyer. If that is the case, you probably should use a probit or logit rather than a nested logit. You can also model whether the firm has an R&D department (yes or no) using a similar approach.

The nested and conditional logits are used when you have an agent (a firm) making a choice among many alternatives (more than two).

Take a look at the restaurant.dta sample dataset and the nlogit help file and it will become clear.



On Mon, 28 Nov 2011 14:39:19 +0100, Solon Moreira wrote:
Dear Stata list readers,

This is a question regarding the way that I should structure the tree
of a nested logit model to get the right output.

I have a dataset consisting of 1200 firms that buy and sell
technologies. I am trying to run a model in which in the first level I can observe how firm-specific variables affect the likelihood of being a supplier instead of a buyer. The way that my model is structured now
this part of the nest is shown in my stata output with no problem.
However, I am having problem with my second level, I would like the
output to show how some alternative specific variables affect the
likelihood that buyers and suppliers will have an R&D department. So,
I want to produce an output in which the first level explains the
likelihood of being a buyer or a supplier and second level the
likelihood that the buyer will or not have an R&D department and the
supplier will or not have an R&D department. As I mentioned, I am able
to produce an output in which I can observe the first level, but in
the second level instead of comparing buyers that have R&D with buyers
that do not have it (and the same wit!
 h suppliers), my output shows all the 4 final alternatives in the
same model, taking one of them as the baseline.

That is the command I am using to build the tree:

nlogitgen r&d= final_outcome(buyer_n: 1, buyer_w: 2, supplier_n: 3,
supplier_w: 4)
nlogitgen buyer_or_supplier= r&d(buyer: buyer_n | buyer_w , supplier:
supplier_n | supplier_w)

I could not figure out a way to compare only buyers with and without
R&D and suppliers with and without R&D in the second level.

Any suggestions are more than welcome
Very best,

*   For searches and help try:

Sergio Alvarez
Food and Resource Economics
University of Florida
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