IDEAS home Printed from https://ideas.repec.org/p/ags/aare13/152165.html
   My bibliography  Save this paper

Measuring Pre-Commited Quantities Through Consumer Price Formation

Author

Listed:
  • 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.

Suggested Citation

  • Marsh, Thomas L. & Piggott, Nicholas E., 2013. "Measuring Pre-Commited Quantities Through Consumer Price Formation," 2013 Conference (57th), February 5-8, 2013, Sydney, Australia 152165, Australian Agricultural and Resource Economics Society.
    • Handle: RePEc:ags:aare13:152165
    DOI: 10.22004/ag.econ.152165
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/152165/files/CP%20Marsh.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.152165?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Luenberger, David G., 1992. "Benefit functions and duality," Journal of Mathematical Economics, Elsevier, vol. 21(5), pages 461-481.
    2. Holt, Matthew T & Goodwin, Barry K, 1997. "Generalized Habit Formation in an Inverse Almost Ideal Demand System: An Application to Meat Expenditures in the U.S," Empirical Economics, Springer, vol. 22(2), pages 293-320.
    3. Eales, James S. & Unnevehr, Laurian J., 1994. "The inverse almost ideal demand system," European Economic Review, Elsevier, vol. 38(1), pages 101-115, January.
    4. repec:cup:cbooks:9780521623940 is not listed on IDEAS
    5. Nicholas E. Piggott, 2003. "The Nested PIGLOG Model: An Application to U.S. Food Demand," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(1), pages 1-15.
    6. Nicholas E. Piggott & Thomas L. Marsh, 2004. "Does Food Safety Information Impact U.S. Meat Demand?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(1), pages 154-174.
    7. Palmquist, Raymond B., 1988. "Welfare measurement for environmental improvements using the hedonic model: The case of nonparametric marginal prices," Journal of Environmental Economics and Management, Elsevier, vol. 15(3), pages 297-312, September.
    8. Dadi Kristofersson & Kyrre Rickertsen, 2004. "Efficient Estimation of Hedonic Inverse Input Demand Systems," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(4), pages 1127-1137.
    9. Holt, Matthew T., 2002. "Inverse demand systems and choice of functional form," European Economic Review, Elsevier, vol. 46(1), pages 117-142, January.
    10. Richard C. Bishop & Matthew T. Holt, 2002. "A semiflexible normalized quadratic inverse demand system: an application to the price formation of fish," Empirical Economics, Springer, vol. 27(1), pages 23-47.
    11. Pollak, Robert A & Wales, Terence J, 1981. "Demographic Variables in Demand Analysis," Econometrica, Econometric Society, vol. 49(6), pages 1533-1551, November.
    12. Pollak, Robert A & Wales, Terence J, 1980. "Comparison of the Quadratic Expenditure System and Translog Demand Systems with Alternative Specifications of Demographic Effects," Econometrica, Econometric Society, vol. 48(3), pages 595-612, April.
    13. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1975. "Transcendental Logarithmic Utility Functions," American Economic Review, American Economic Association, vol. 65(3), pages 367-383, June.
    14. Barten, A. P. & Bettendorf, L. J., 1989. "Price formation of fish : An application of an inverse demand system," European Economic Review, Elsevier, vol. 33(8), pages 1509-1525, October.
    15. Bollino, Carlo Andrea & Violi, Roberto, 1990. "GAITL: A generalised version of the almost ideal and translog demand systems," Economics Letters, Elsevier, vol. 34(2), pages 127-129, October.
    16. Dadi Kristofersson & Kyrre Rickertsen, 2007. "Hedonic Price Models for Dynamic Markets," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 69(3), pages 387-412, June.
    17. Kakwani, Nanak C, 1977. "On the Estimation of Consumer Unit Scales," The Review of Economics and Statistics, MIT Press, vol. 59(4), pages 507-510, November.
    18. Lewbel, Arthur, 1989. "Nesting the AIDS and Translog Demand System," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 30(2), pages 349-356, May.
    19. Bollino, Carlo Andrea, 1987. "Gaids: a generalised version of the almost ideal demand system," Economics Letters, Elsevier, vol. 23(2), pages 199-202.
    20. Chambers, Robert G. & Chung, Yangho & Fare, Rolf, 1996. "Benefit and Distance Functions," Journal of Economic Theory, Elsevier, vol. 70(2), pages 407-419, August.
    21. Tonsor, Glynn T. & Marsh, Thomas L., 2005. "Comparing Heterogeneous Consumption in US and Japanese Meat and Fish Demand," 2005 Annual meeting, July 24-27, Providence, RI 19567, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    22. Alston, Julian M. & Chalfant, James A. & Piggott, Nicholas E., 2001. "Incorporating demand shifters in the Almost Ideal demand system," Economics Letters, Elsevier, vol. 70(1), pages 73-78, January.
    23. Cornes,Richard, 1992. "Duality and Modern Economics," Cambridge Books, Cambridge University Press, number 9780521336017.
    24. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-326, June.
    25. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762.
    26. Pollak, Robert A & Wales, Terence J, 1978. "Estimation of Complete Demand Systems from Household Budget Data: The Linear and Quadratic Expenditure Systems," American Economic Review, American Economic Association, vol. 68(3), pages 348-359, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rowland, Christopher S. & Mjelde, James W. & Dharmasena, Senarath, 2017. "Policy implications of considering pre-commitments in U.S. aggregate energy demand system," Energy Policy, Elsevier, vol. 102(C), pages 406-413.
    2. John Gibson & Bonggeun Kim, 2017. "30 Years of Being Wrong: A Systematic Review and Critical Test of the Cox and Wohlgenant Approach to Quality-Adjusted Prices in Demand Analysis," Working Papers in Economics 17/16, University of Waikato.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chen, Shu-Ling & Chern, Wen S. & Lin, Yi-Ru & Liu, Kang Ernest, 2015. "Effects of food safety and health risk information on demand for food in Taiwan," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205452, Agricultural and Applied Economics Association.
    2. Okrent, Abigail M. & Alston, Julian M., 2011. "Demand for Food in the United States: A Review of Literature, Evaluation of Previous Estimates, and Presentation of New Estimates of Demand," Monographs, University of California, Davis, Giannini Foundation, number 251908, December.
    3. Holt, Matthew T. & Goodwin, Barry K., 2009. "The Almost Ideal and Translog Demand Systems," MPRA Paper 15092, University Library of Munich, Germany.
    4. Holt, Matthew T., 2002. "Inverse demand systems and choice of functional form," European Economic Review, Elsevier, vol. 46(1), pages 117-142, January.
    5. Färe, Rolf & Grosskopf, Shawna & Hayes, Kathy J. & Margaritis, Dimitris, 2008. "Estimating demand with distance functions: Parameterization in the primal and dual," Journal of Econometrics, Elsevier, vol. 147(2), pages 266-274, December.
    6. Johnson, Rutherford & Vickner, Steven S. & Pagoulatos, Angelos & Debertin, David L., 2006. "Health Media Coverage and Consumer Choice: A Panel Data Econometric Analysis of the Domestic Cracker Market," 2006 Annual meeting, July 23-26, Long Beach, CA 21110, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. Piggott, Nicholas E., 2006. "Consumer Price Formation with Demographic Translating," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25252, International Association of Agricultural Economists.
    8. Sanvi Avouyi-Dovi & Christian Pfister & Franck Sédillot, 2019. "French Households’ Portfolio: The Financial Almost Ideal Demand System Appraisal," Working papers 728, Banque de France.
    9. Chern, Wen S. & Lee, Hwang Jaw, 1989. "Nonparametric and Parametric Analyses of Demand for Food at Home and Away from Home," 1989 Annual Meeting, July 30-August 2, Baton Rouge, Louisiana 270706, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    10. Anonymous & Bosch, Darrell J., 2013. "Table of contents," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 45(01), February.
    11. Rangkakulnuwat, Poomthan & Wang, H. Holly & Ahn, Sung K., 2007. "The inverse imported factor demand system in Thailand: A cointegration analysis," Economics Letters, Elsevier, vol. 94(3), pages 402-407, March.
    12. Yeboah, Godfred & Maynard, Leigh J., 2004. "The Impact Of Bse, Fmd, And U.S. Export Promotion Expenditures On Japanese Meat Demand," 2004 Annual meeting, August 1-4, Denver, CO 19978, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    13. Wang, Qingbin & Halbrendt, Catherine & Johnson, Stanley R., 1996. "A non-nested test of the AIDS vs. the translog demand system," Economics Letters, Elsevier, vol. 51(2), pages 139-143, May.
    14. Matthew T. Holt & Joseph V. Balagtas, 2009. "Estimating Structural Change with Smooth Transition Regressions: An Application to Meat Demand," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(5), pages 1424-1431.
    15. Kockelman, Kara Maria & Krishnamurthy, Sriram, 2004. "A new approach for travel demand modeling: linking Roy's Identity to discrete choice," Transportation Research Part B: Methodological, Elsevier, vol. 38(5), pages 459-475, June.
    16. Simona Bigerna & Carlo Andrea Bollino & Maria Chiara D’Errico, 2020. "A general expenditure system for estimation of consumer demand functions," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 37(3), pages 1071-1088, October.
    17. Hovhannisyan, Vardges & Gould, Brian W., 2010. "Quantifying the Structure of Food Demand in China Using a Generalized Quadratic AIDS Specification," 2010 Annual Meeting, February 6-9, 2010, Orlando, Florida 56422, Southern Agricultural Economics Association.
    18. Huang, Pei, 2014. "An Inverse Demand System for Blue Crab in the Chesapeake Bay: Endogeneity and Seasonality," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 169827, Agricultural and Applied Economics Association.
    19. Keith R. McLaren & K. K. Gary Wong, 2009. "The Benefit Function Approach to Modeling Price-Dependent Demand Systems: An Application of Duality Theory," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(4), pages 1110-1123.
    20. Robert H. Beach & Matthew T. Holt, 2001. "Incorporating Quadratic Scale Curves in Inverse Demand Systems," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(1), pages 230-245.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aare13:152165. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaresea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.