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The Application and Economic Interpretation of Selectivity Models

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  • Chung L. Huang
  • Robert Raunikar
  • Sukant Misra

Abstract

Substantial differences in economic interpretations may be inferred from the estimated selectivity model results. Using the demand for frozen concentrated orange juice (FCOJ) as an example, the study suggests that the consumption patterns are quite similar between national brand and private label when the marginal effects and elasticities are evaluated based on actual observations rather than unobserved latent variables. Results show that private label FCOJ is considered as a normal (inferior) good if the income effect is assessed based on actual (potential) purchases. The estimated cents-off elasticities for private label FCOJ also vary substantially depending on which approach is used.

Suggested Citation

  • Chung L. Huang & Robert Raunikar & Sukant Misra, 1991. "The Application and Economic Interpretation of Selectivity Models," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(2), pages 496-501.
    • Handle: RePEc:oup:ajagec:v:73:y:1991:i:2:p:496-501.
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    Cited by:

    1. Doris Läpple & Thia Hennessy & Carol Newman, 2013. "Quantifying the Economic Return to Participatory Extension Programmes in Ireland: an Endogenous Switching Regression Analysis," Journal of Agricultural Economics, Wiley Blackwell, vol. 64(2), pages 467-482, June.
    2. Mokhtarian, Patricia L. & Cao, Xinyu, 2008. "Examining the impacts of residential self-selection on travel behavior: A focus on methodologies," Transportation Research Part B: Methodological, Elsevier, vol. 42(3), pages 204-228, March.
    3. Heltberg, R. & Tarp, F., 2002. "Agricultural supply response and poverty in Mozambique," Food Policy, Elsevier, vol. 27(2), pages 103-124, April.
    4. Edilegnaw, Wale, 2006. "What do Farmers financially lose if they fail to use improved Seeds? Some Econometric Results for Wheat and Implications for Agricultural Extension Policy in Ethiopia," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 12(2), pages 1-81, November.
    5. Wale, Edilegnaw, 2008. "A study on financial opportunity costs of growing local varieties of sorghum in Ethiopia: Implications for on-farm conservation policy," Ecological Economics, Elsevier, vol. 64(3), pages 603-610, January.
    6. Ayal Kimhi, 1999. "Estimation of an endogenous switching regression model with discrete dependent variables: Monte-Carlo analysis and empirical application of three estimators," Empirical Economics, Springer, vol. 24(2), pages 225-241.
    7. Cao, Xinyu & Mokhtarian, Patricia & Handy, Susan, 2008. "Examining The Impacts of Residential Self-Selection on Travel Behavior: Methodologies and Empirical Findings," Institute of Transportation Studies, Working Paper Series qt08x1k476, Institute of Transportation Studies, UC Davis.
    8. Kimhi, Ayal, 1991. "Estimation of Endogenous Switching Regression Models with Discrete Dependent Variables: An Application to the Estimation of Farm Women's Farm and Off-Farm Participation Equations," Working Papers 197766, University of Maryland, Department of Agricultural and Resource Economics.
    9. Colin Vance & Jacqueline Geoghegan, 2004. "Modeling the Determinants of Semi-Subsistent and Commercial Land Uses in an Agricultural Frontier of Southern Mexico: A Switching Regression Approach," International Regional Science Review, , vol. 27(3), pages 326-347, July.
    10. Alene, Arega D. & Manyong, V.M. & Omanya, G. & Mignouna, H.D. & Bokanga, M. & Odhiambo, G., 2008. "Smallholder market participation under transactions costs: Maize supply and fertilizer demand in Kenya," Food Policy, Elsevier, vol. 33(4), pages 318-328, August.
    11. Kaelab K. Haile & Eleonora Nillesen & Nyasha Tirivayi, 2019. "Impact of Formal Climate Risk Transfer Mechanisms on Risk-Aversion: Empirical Evidence from Rural Ethiopia," CESifo Working Paper Series 7717, CESifo.
    12. Haile, Kaleab K. & Nillesen, Eleonora & Tirivayi, Nyasha, 2020. "Impact of formal climate risk transfer mechanisms on risk-aversion: Empirical evidence from rural Ethiopia," World Development, Elsevier, vol. 130(C).
    13. Arega D. Alene & V. M. Manyong & Eric F. Tollens & Steffen Abele, 2009. "Efficiency–equity tradeoffs and the scope for resource reallocation in agricultural research: evidence from Nigeria," Agricultural Economics, International Association of Agricultural Economists, vol. 40(1), pages 1-14, January.

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