Quality, Quantity, and Nutritional Impacts of Rice Price Changes in Vietnam
Asian governments intervene in the world rice market to protect domestic consumers. Whether consumers are nutritionally vulnerable depends on the elasticity of calories with respect to rice prices. Common demand models applied to household survey and market price data ignore quality substitution and force all adjustment onto the quantity (calorie) margin. This paper uses data from Vietnam on market prices, food quantity and quality. A 10% increase in the relative price of rice reduces household calorie consumption by less than 2% but this elasticity would be wrongly estimated to be more than twice as large if quality substitution is ignored.
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