Demand Systems I: Main Results

Kenneth W. Clements (), Haiyan Liu, Marc Jim M. Mariano (), Eliyathamby A. Selvanathan (), Saroja Selvanathan () and George Verikios ()
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Kenneth W. Clements: University of Western Australia
Haiyan Liu: University of Western Australia
Marc Jim M. Mariano: Commonwealth Scientific and Industrial Research Organisation
Eliyathamby A. Selvanathan: Griffith University
Saroja Selvanathan: Griffith University
George Verikios: Griffith University

Chapter Chapter 6 in Short-cut Demand Elasticities and Other Convenient Approaches to Consumer Demand, 2025, pp 103-126 from Springer

Abstract: Abstract A demand system comprises a set of demand equations, one for each good and service purchased by the consumer. This chapter starts with a discussion on the nature of demand systems associated with a consumer-optimisation problem. Then comes Engel curves, the relation between expenditure on each good and service as a function of income. These are a form of a demand system whereby all consumers pay the same set of prices, as might approximate the case with survey data of household expenditures at a given point of time. Subsequent sections present several popular demand systems: the linear expenditure system and its generalisations, the Rotterdam model, the almost ideal system and the quadratic version, and related models including the translog. The chapter concludes with a discussion of index numbers as valuable summary measures and their links with consumer demand.

Date: 2025
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DOI: 10.1007/978-981-96-3588-7_6

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