Distinguishing between Market Participation and Infrequency of Purchase Models of Butter Demand

Noel Blisard and James Blaylock

American Journal of Agricultural Economics, 1993, vol. 75, issue 2, 314-320

Abstract: Household butter expenditures are modeled by market participation and infrequency-of-purchase specifications. The market participation model assumes that zero expenditures represent either traditional corner solutions or consumers who never use the product, whereas the infrequency-of-purchase model assumes that zero expenditures represent either corner solutions or consumption out of storage. We determine that the infrequency-of-purchase specification is preferred to the market participation model by applying a nonnested test based upon likelihood functions. If household expenditure surveys contained information about participation and frequency of purchase, a likelihood function which contained both models could be written and estimated.

Date: 1993
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:75:y:1993:i:2:p:314-320.

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