4.2. Poisson Models for Count Data with Two Observations Per Individual
When there are only two observations per individual, we saw previously that a linear or logistic fixed effects analysis could be done using simplified methods with conventional software. This is also true for count data. In fact, a fixed effects Poisson regression model can be estimated with an ordinary logistic regression program.
For the patent data, let's ignore the intervening years and focus only on 1975 and 1979. Let yi1 be the patent count for firm i in 1975 and yi2 the patent count in 1979. We assume that each of these variables has a Poisson distribution with parameter λit. That is, the probability that yit = r is given by
Why a Poisson distribution? Well, the ...
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