A Synthetic Demand System: An Application to U.S. Consumer Demand for Rice and Selected Rice Substitutes

X.M. Gao, Eric J. Wailes and Gail Cramer

Review of Agricultural Economics, 1994, vol. 16, issue 1, 27-38

Abstract: This article presents estimates of economic and demographic effects on the demand for rice and its complex carbohydrate substitutes: potatoes, bread, and pasta. Using a synthetic level version demand system which nests the Almost Ideal Demand System (AIDS) model, the level version Rotterdam model, and the Central Bureau of Statistics (CBS) model, the results indicate: (1) inelastic demand for all four goods; (2) significant cross-price effects; and (3) all goods are Hicksian substitutes. The impacts of demographic variables, such as household size, age structure, region, ethic origin, and having nursing children are significant. Quality and consumer perception of rice as a healthy food are also important in explaining consumer demand.

Date: 1994
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