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Dynamic food demand in urban China

Author

Listed:
  • De Zhou
  • Xiaohua Yu
  • Thomas Herzfeld

Abstract

Purpose - – The purpose of this paper is to investigate dynamic food demand in urban China, with use of a complete dynamic demand system – dynamic linear expenditure system-linear approximate dynamic almost ideal demand system (DLES-LA/DAIDS), which pushes forward the techniques of demand analysis. Design/methodology/approach - – The authors employ a transitionary demand process and develop a new approach of complete demand system with a two-stage dynamic budgeting: a strongly separable DLES in the first stage and a LA/DAIDS in the second stage. Employing provincial aggregate data (1995-2010) from the China urban household surveys, The authors estimated the demand elasticities for primary food products in urban China. Findings - – The results indicate that most primary food products are necessities and price inelastic for urban households in China. The authors also found that the dynamic model tends to yield relatively smaller expenditure elasticities in magnitude than the static models do due to the friction effect of dynamic adjusting costs, such as habit formation, switching costs, and learning process. However, the dynamic effects on own price elasticities are inconclusive due to the add-up restriction. Practical implications - – The research contributes to the demand analysis methodologically, and can be used for better projections in policy simulation models. Originality/value - – This paper methodologically relaxes the restrictive assumption of instant adjustment in static models and allows consumers to make a dynamic decision in food consumption. Empirically, the authors introduce a new complete dynamic demand model and carry out a case study with the use of urban household data in China.

Suggested Citation

  • De Zhou & Xiaohua Yu & Thomas Herzfeld, 2015. "Dynamic food demand in urban China," China Agricultural Economic Review, Emerald Group Publishing, vol. 7(1), pages 27-44, February.
  • Handle: RePEc:eme:caerpp:v:7:y:2015:i:1:p:27-44
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    References listed on IDEAS

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    Cited by:

    1. Marian Rizov & Andrej Cupak & Jan Pokrivcak, 2015. "Food security and household consumption patterns in Slovakia," LICOS Discussion Papers 36015, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    2. Huffman, Sonya & Rizov, Marian, 2016. "Life Satisfaction and Diet: Evidence from the Russian Longitudinal Monitoring Survey," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235148, Agricultural and Applied Economics Association.
    3. Guanghua Han & Xujin Pu & Bo Fan, 2017. "Sustainable Governance of Organic Food Production When Market Forecast Is Imprecise," Sustainability, MDPI, Open Access Journal, vol. 9(6), pages 1-20, June.
    4. Sheng, Yu & Song, Ligang, 2019. "Agricultural production and food consumption in China: A long-term projection," China Economic Review, Elsevier, vol. 53(C), pages 15-29.
    5. Huang, Yingying & Tian, Xu, 2019. "Food accessibility, diversity of agricultural production and dietary pattern in rural China," Food Policy, Elsevier, vol. 84(C), pages 92-102.
    6. Braha, Kushtrim & Cupak, Andrej & Qineti, Artan & Pokrivcak, Jan, 2018. "Food Demand System in Transition Economies: Evidence from Kosovo," 162nd Seminar, April 26-27, 2018, Budapest, Hungary 272050, European Association of Agricultural Economists.
    7. Adrej Cupák & Ján Pokrivčák & Marian Rizov, 2016. "Diverzifikácia spotreby potravín na Slovensku
      [Diversity of Food Consumption in Slovakia]
      ," Politická ekonomie, University of Economics, Prague, vol. 2016(5), pages 608-626.
    8. Pokrivcak, Jan & Cupak, Andrej & Rizov, Marian, 2015. "Household food security and consumption patterns in Central and Eastern Europe: the Case of Slovakia," 2015 Fourth Congress, June 11-12, 2015, Ancona, Italy 207287, Italian Association of Agricultural and Applied Economics (AIEAA).

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