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Market development and food demand in rural China

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  • Huang, Jikun
  • Rozelle, Scott

Abstract

This paper seeks to understand how market imperfections affect the behavior of consumers in China's rural economy. A theoretical and empirical model is developed and estimated using a household-level data from six counties in Hebei Province. The results show that market development plays an important role in explaining food consumption behavior in China. As the market develops, farmers demand less grain and vegetables and consume more meat, fruit, and other food products after control for income and price effects. Moreover, the elasticities of demand also change as farm households begin to rely more on rural markets. The results of this paper suggest that a government concerned about the welfare of its rural population may want to be paying a more active role in fostering rural markets. Understanding the forces behind these consumption pattern shifts also will aid academics and policymakers in making better projections about future consumerneeds and price levels.
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Suggested Citation

  • Huang, Jikun & Rozelle, Scott, 1998. "Market development and food demand in rural China," China Economic Review, Elsevier, vol. 9(1), pages 25-45.
  • Handle: RePEc:eee:chieco:v:9:y:1998:i:1:p:25-45
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    References listed on IDEAS

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    1. Huang, Jikun & David, Cristina C., 1993. "Demand for cereal grains in Asia: the effect of urbanization," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 8(2), February.
    2. Peterson, E. Wesley F. & Jin, Lan & Ito, Shoichi, 1991. "An econometric analysis of rice consumption in the People's Republic of China," Agricultural Economics, Blackwell, vol. 6(1), pages 67-78, October.
    3. Udry, Christopher, 1990. "Credit Markets in Northern Nigeria: Credit as Insurance in a Rural Economy," World Bank Economic Review, World Bank Group, vol. 4(3), pages 251-269, September.
    4. Sicular, Terry, 1988. "Plan and Market in China's Agricultural Commerce," Journal of Political Economy, University of Chicago Press, vol. 96(2), pages 283-307, April.
    5. Peterson, E. Wesley F. & Jin, Lan & Ito, Shoichi, 1991. "An econometric analysis of rice consumption in the People's Republic of China," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 6(1), October.
    6. Wang, Zhi & Kinsey, Jean, 1994. "Consumption and saving behavior under strict and partial rationing," China Economic Review, Elsevier, vol. 5(1), pages 83-100.
    7. Shoichi Ito & E. Wesley F. Peterson & Warren R. Grant, 1989. "Rice in Asia: Is It Becoming an Inferior Good?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(1), pages 32-42.
    8. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-326, June.
    9. Barten, Anton P, 1977. "The Systems of Consumer Demand Functions Approach: A Review," Econometrica, Econometric Society, vol. 45(1), pages 23-51, January.
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