Unconditional Elasticities in Two-Stage Demand Systems: An Approximate Solution

Alain Carpentier and Hervé Guyomard

American Journal of Agricultural Economics, 2001, vol. 83, issue 1, 222-229

Abstract: Two-stage budgeting postulates that the consumer's utility maximization decision can be decomposed into two steps. In the first stage, total expenditure is allocated over broad groups of goods. In the second stage, group expenditures are allocated over elementary commodities. In this article, we assume that the current weighted true cost-of-living price indices defined for each broad group of elementary commodities vary only very slightly with sub-utility levels. Hence, it is possible to approximate the first stage of a two-stage budgeting structure by a maximization problem involving a single price index and a single quantity index for each of the broad groups. Relationships between conditional and unconditional expenditure and price elasticities are derived within this context. Copyright 2001, Oxford University Press.

Date: 2001
References: Add references at CitEc
Citations: View citations in EconPapers (70)

Downloads: (external link)
http://hdl.handle.net/10.1111/0002-9092.00149 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Unconditional elasticities in two-stage demand systems: an approximate solution (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:oup:ajagec:v:83:y:2001:i:1:p:222-229

Access Statistics for this article

American Journal of Agricultural Economics is currently edited by Madhu Khanna, Brian E. Roe, James Vercammen and JunJie Wu

More articles in American Journal of Agricultural Economics from Agricultural and Applied Economics Association Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().