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Estimation of demand systems based on elasticities of substitution

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Author Info
Germán Coloma

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Abstract

This paper develops a model for demand-system estimations, whose coefficients are own-price Marshallian elasticities and elasticities of substitution between goods. The model satisfies the homogeneity, symmetry and, eventually, adding-up restrictions implied by consumer theory, and is primarily useful for the estimation of the demands of several goods of the same industry or group of products. The characteristics of the model are compared to other existing alternatives (logarithmic, translog, AIDS and QUAIDS demand systems). The model is finally applied to estimate the demands for several carbonated soft drinks in Argentina, and its results are presented, together with the ones obtained with the other estimation methods.

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Publisher Info
Paper provided by Universidad del CEMA in its series CEMA Working Papers: Serie Documentos de Trabajo. with number 322.

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Length: 22 pages
Date of creation: Jun 2006
Date of revision:
Handle: RePEc:cem:doctra:322

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Related research
Keywords: Demand Systems; Elasticity of Substitution; Simultaneous Equations; Carbonated Soft Drinks;

Find related papers by JEL classification:
C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Alston, Julian M & Foster, Kenneth A & Green, Richard D, 1994. "Estimating Elasticities with the Linear Approximate Almost Ideal Demand System: Some Monte Carlo Results," The Review of Economics and Statistics, MIT Press, vol. 76(2), pages 351-56, May. [Downloadable!] (restricted)
  2. Moschini, Giancarlo & Vissa, A., 2004. "Flexible Specification of Mixed Demand Systems," Staff General Research Papers 11249, Iowa State University, Department of Economics.
  3. James Banks & Richard Blundell & Arthur Lewbel, 1997. "Quadratic Engel Curves And Consumer Demand," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 527-539, November. [Downloadable!] (restricted)
  4. Alston, Julian M & Chalfant, James A & Piggott, Nicholas E, 2002. "Estimating and Testing the Compensated Double-Log Demand Model," Applied Economics, Taylor and Francis Journals, vol. 34(9), pages 1177-86, June. [Downloadable!] (restricted)
  5. Barten, Anton P, 1993. "Consumer Allocation Models: Choice of Functional Form," Empirical Economics, Springer, vol. 18(1), pages 129-58.
  6. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-26, June. [Downloadable!] (restricted)
  7. Roy J. Epstein & Daniel L. Rubinfeld, 2002. "Merger Simulation: A Simplified Approach with New Applications," Industrial Organization 0201002, EconWPA. [Downloadable!]
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  8. Tirtha Dhar & Jean-Paul Chavas & Ronald W. Cotterill & Brian W. Gould, 2005. "An Econometric Analysis of Brand-Level Strategic Pricing Between Coca-Cola Company and PepsiCo," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 14(4), pages 905-931, December. [Downloadable!] (restricted)
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