Review of discrete-continuous models in energy and transportation

Abstract

Demand modelling of energy and transport incorporate interconnected decision variables, which are either discrete or continuous. After forty years, from McFadden multinomial logit model and incorporating it to Heckman endogenous simultaneous equation, there is an opportunity to determine the parameters of interconnected decisions simultaneously. These models are bounded by the utility theory. Now these models have matured, and their empirical aspects revealed. In this study, the pioneering works on discrete-continuous models that have been developed in the field of energy and transportation have been reviewed with a view of proposing new development to these models. These models theoretically are based on two approaches; McFadden indirect utility function and Gorman polar functional form of utility structures. In both approaches, the models are estimated by maximum likelihood procedures.