Identification of Counterfactuals and Payoffs in Dynamic Discrete Choice with an Application to Land Use

Kalouptsidi, Myrto, Scott, Paul and Souza-Rodrigues, Edouardo (2015) Identification of Counterfactuals and Payoffs in Dynamic Discrete Choice with an Application to Land Use. TSE Working Paper, n. 15-596, Toulouse

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Official URL: http://tse-fr.eu/pub/29623

Abstract

Dynamic discrete choice models are non-parametrically not identified without restrictions on payoff functions, yet counterfactuals may be identified even when payoffs are not. We provide necessary and sufficient conditions for the identification of a wide range of counterfactuals for models with nonparametric payoffs, as well as for commonly used parametric functions, and we obtain both positive and negative results. We show that access to extra data of asset resale prices (when applicable) can solve non-identifiability of both payoffs and counterfactuals. The theoretical findings are illustrated empirically in the context of agricultural land use. First, we provide identification results for models with unobserved market-level state variables. Then, using a unique spatial dataset of land use choices and land resale prices, we estimate the model and investigate two policy counterfactuals: long run land use elasticity (identified) and a fertilizer tax (not identified, affected dramatically by restrictions).

Item Type: Monograph (Working Paper)
Language: English
Date: August 2015
Place of Publication: Toulouse
Uncontrolled Keywords: Identification, Dynamic Discrete Choice, Counterfactual, Land Use
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse 1 Capitole
Site: UT1
Date Deposited: 02 Oct 2015 13:39
Last Modified: 21 Mar 2018 13:31
OAI ID: oai:tse-fr.eu:29623
URI: http://publications.ut-capitole.fr/id/eprint/18477

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