Estimation of price elasticities from cross-sectional data

Chanjin Chung (), Diansheng Dong (), Todd Schmit, Harry Kaiser and Brian W. Gould
Additional contact information
Brian W. Gould: 411 Taylor Hall, University of Wisconsin-Madison, Madison, Wisconsin 53707, Postal: 411 Taylor Hall, University of Wisconsin-Madison, Madison, Wisconsin 53707

Agribusiness, 2005, vol. 21, issue 4, 565-584

Abstract: This study develops an empirical framework to estimate quality-adjusted price elasticities from cross-sectional data. The new approach shows the importance of properly adjusting for quality variation in both prices and quantities in demand analysis. When quality adjustment is concerned only with price, the unit value-based elasticity tends to overstate the true price elasticity. However, when the quality adjustment is considered with both price and quantity, the direction of bias depends on the level of the true price elasticity. If the true price elasticity is unit elastic, there would be no bias. However, the price elasticity estimated with unit values would understate a true inelastic price elasticity while it would overstate a true elastic price elasticity. [EconLit citations: D120 Q110]. © 2005 Wiley Periodicals, Inc. Agribusiness 21: 565-584, 2005.

Date: 2005
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://hdl.handle.net/10.1002/agr.20065 Link to full text; subscription required (text/html)

Related works:
Working Paper: Estimation of Price Elasticities from Cross-Sectional Data (2001)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:agribz:v:21:y:2005:i:4:p:565-584

DOI: 10.1002/agr.20065

Access Statistics for this article

Agribusiness is currently edited by Ronald W. Cotterill

More articles in Agribusiness from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().