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Measuring Pre-Commited Quantities Through Consumer Price Formation

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  • Marsh, Thomas L.
  • Piggott, Nicholas E.

Abstract

We investigate how to theoretically and empirically measure pre-committed quantities through price formation utilizing translating in the consumer distance function. The translated consumer distance function is defined as a dual to the translated utility, indirect utility, and expenditure functions. Translating procedures also provide more general analytical means to incorporate pre- committed quantities (and other shift or demographic variables) into inverse demand systems. This approach yields a class of inverse demand functions that can nest most known functional forms. For example, the Inverse Generalized Almost Ideal Demand (IGAI) model can be formed by applying translating procedures to the Inverse Almost Ideal Demand model. An empirical example of the IGAI model with inferences on the translating parameters themselves is provided for illustrative purposes.

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Bibliographic Info

Paper provided by Australian Agricultural and Resource Economics Society in its series 2013 Conference (57th), February 5-8, 2013, Sydney, Australia with number 152165.

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Date of creation: Feb 2013
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Handle: RePEc:ags:aare13:152165

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Related research

Keywords: duality; distance function; price formation; food demand; translating; inverse demand system; inverse generalized almost ideal demand model; Consumer/Household Economics; Demand and Price Analysis; Research Methods/ Statistical Methods; C10; D11; D12;

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