Dynamic Food Demand in Urban China

De Zhou, Xiaohua Yu and Thomas Herzfeld

No 168527, GlobalFood Discussion Papers from Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development

Abstract: PURPOSE – The purpose of this paper is to investigate dynamic food demand in urban China, with use of a complete dynamic demand system - DLES-LA/DAIDS, which pushes forward the techniques of demand analysis. DESIGN/METHODOLOGY/APPROACH – We employ a transitionary demand process and develop a new approach of complete demand system with a two-stage dynamic budgeting : an additively separable dynamic linear expenditure system (DLES) in the first stage and a linear approximate dynamic almost ideal demand system (LA/DAIDS). Employing provincial aggregate data (1995-2010) from the China urban household surveys (UHS), we estimated the demand elasticities for primary food products in urban China. FINDINGS – Our results indicate that most primary food products are necessities and price-inelastic for urban households in China. We also found that the dynamic model tends to yield relatively smaller expenditure elasticities in magnitude than the static models do due to dynamic adjusting costs, such as habit formation, switching costs, and learning process. PRACTICAL IMPLICATIONS – The research contributes to the demand analysis methodologically, and can be used for better projections in policy simulation models. ORIGINALITY/VALUE – This paper methodologically releases the restrictive assumption of instant adjustment in static models and allows consumers to make a dynamic decision in food consumption. Empirically, we introduce a new complete dynamic demand model and carry out a case study with the use of urban household data in China.

Keywords: Agricultural and Food Policy; Demand and Price Analysis; Food Consumption/Nutrition/Food Safety (search for similar items in EconPapers)
Pages: 26
Date: 2014-05
New Economics Papers: this item is included in nep-agr, nep-cna and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
https://ageconsearch.umn.edu/record/168527/files/GlobalFood_DP33.pdf (application/pdf)

Related works:
Journal Article: Dynamic food demand in urban China (2015)
Journal Article: Dynamic food demand in urban China (2015)
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:ags:gagfdp:168527

DOI: 10.22004/ag.econ.168527

Access Statistics for this paper

More papers in GlobalFood Discussion Papers from Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().