Estimation of a Two-Level Demand System with Limited Dependent Variables

Steven T. Yen and Terry Roe

American Journal of Agricultural Economics, 1989, vol. 71, issue 1, 85-98

Abstract: A two-level demand model was derived from a strongly separable conditional indirect utility function to analyze Dominican rural and urban household consumption at different income levels. For samples with significant zero consumption, a multivariate limited dependent variable model utilizing the concept of virtual prices was used to obtain consistent estimates of consumption parameters. Results show that households with higher incomes tend to be less responsive to own-price and income changes in consumption of most food and nonfood commodities. For demographic variates, the elasticities of rice and aggregate food with respect to household composition variables are all positive with few exceptions.

Date: 1989
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:71:y:1989:i:1:p:85-98.

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