Estimating a Demand System with Choke Prices

Amos Golan, Jeffrey LaFrance (), Jeffrey Perloff and Skipper Seabold

Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series from Department of Agricultural & Resource Economics, UC Berkeley

Abstract: We present a new, information-theoretic approach for estimating a system of many demand equations where the unobserved reservation or choke prices vary across consumers. We illustrate this method by estimating a nonlinear, almost ideal demand system (AIDS) for four types of meat using cross-sectional data from Mexico, where most households did not buy at least one type of meat during the survey week. The system of de­mand curves vary across demo­graphic groups.

Keywords: Social and Behavioral Sciences; demand system; choke prices; generalized maximum entropy (search for similar items in EconPapers)
Date: 2017-08-04
New Economics Papers: this item is included in nep-com, nep-ecm and nep-ind
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