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Commercial Disappearance and Composite Demand for Food with an Application to U.S. Meats

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  • Reed, Albert J.
  • Levedahl, J. William
  • Clark, J. Stephen

Abstract

When elementary prices move strictly proportionately, aggregation over a group of diverse products is valid, and group demand responses can be decomposed into quality and quantity responses. This study shows that when relative elementary prices and group prices are stochastically independent, a similar decomposition is valid. Empirical results suggest consumers respond to changes in prices and income mostly by altering the quality of meat products. These findings imply that using commercial disappearance as a proxy for food demand can be misleading for policy analysis. Key words: commodity aggregation, Composite Commodity Theorem, composite demand, Generalized Composite Commodity Theorem, quantity-quality decomposition

Suggested Citation

  • Reed, Albert J. & Levedahl, J. William & Clark, J. Stephen, 2003. "Commercial Disappearance and Composite Demand for Food with an Application to U.S. Meats," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 28(1), pages 1-18, April.
    • Handle: RePEc:ags:jlaare:30719
    DOI: 10.22004/ag.econ.30719
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    2. Li, Wenying & Zhen, Chen, 2017. "A Reassessment of Product Aggregation Bias in Demand Analysis: An Application to the U.S. Meat Market," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258197, Agricultural and Applied Economics Association.
    3. Xavier Irz, 2010. "Modeling physical quantities of food and nutrients consumed from aggregate data—with an application to Finland," Agricultural Economics, International Association of Agricultural Economists, vol. 41(3‐4), pages 293-304, May.
    4. Lee L. Schulz & Ted C. Schroeder & Tian Xia, 2012. "Studying composite demand using scanner data: the case of ground beef in the US," Agricultural Economics, International Association of Agricultural Economists, vol. 43, pages 49-57, November.
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    6. Reed, Albert J. & Levedahl, J. William & Hallahan, Charles B., 2004. "The Generalized Composite Commodity Theorem And Food Demand Estimation," 2004 Annual meeting, August 1-4, Denver, CO 20107, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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