Economic foundation of ZAGA equilibrium flows

Establish whether zero-adjusted Gamma (ZAGA)-distributed equilibrium flows can be rationalized through an appropriate random utility framework and determine the related entropic optimal transport (E-OT) formulation.

Background

The paper applies a ZAGA specification to trade flows in order to model excess zeros, skewness, and latent heterogeneity. However, unlike the Poisson-based formulation connected to entropic optimal transport in the cited economic literature, the economic micro-foundations of ZAGA-distributed equilibrium flows are not established. The unresolved question is whether an appropriate random utility model and a corresponding E-OT formulation—potentially based on alternative entropy concepts such as Einstein–Bose, Fermi–Dirac, or Tsallis entropy—can generate the proposed distribution. Resolving this issue would provide an economic foundation for the statistical model and connect the network methodology to equilibrium theory.