Eve L. Maler and Jeanne El Andaloussi in their book "Developing SGML DTDs" describe a flexible and powerful methodology for DTD design and development which is widely used in a range of application environments, and is generally recognised as constituting 'best practice' in this area. It makes heavy use of parameter entities to define and exploit a class hierarchy of element types.

XML Schema is a W3C-sponsered effort to define an alternative to DTDs for defining the structure of XML documents, using XML instance syntax. Not surprisingly therefore, it defines element types for declaring elements and attributes.

Despite an official requirement to at least reproduce the functionality of DTDs, XML Schema none-the-less contains no text macro facility, which might be expected to reproduce the functionality of parameter entities. How then is 'best practice' to be carried forward from DTDs to XML Schemas?

The answer lies in two powerful mechanisms which XML Schema introduces: user-defined types (distinct from element types, but crucially involved in their declaration) and element equivalence classes. This paper describes in detail XML Schema's concepts of complex type, type definition by derivation and element equivalence class, shows how they relate to one another, and illustrates their use to define type hierarchies and element class hierarchies without recourse to parameter entities.