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Household Demand in Rural China: A Two-Stage LES-AIDS Model


  • Shenggen Fan
  • Eric J. Wailes
  • Gail L. Cramer


A complete demand system of Chinese rural households is estimated using a two-stage LES-AIDS model and pooled provincial and time-series data from 1982 to 1990. For commodity groups (food, clothing, fuel, housing, and other commodities), demand is price-inelastic. Housing and other commodities are luxury goods, while clothing and food are necessities. Within the food group, price elasticities range from −0.005 to −0.63. Expenditure elasticities are lower for grains and higher for meat, tobacco, and alcohol. The results imply a gap between food demand and supply growth. Therefore, China will face pressure to import food.

Suggested Citation

  • Shenggen Fan & Eric J. Wailes & Gail L. Cramer, 1995. "Household Demand in Rural China: A Two-Stage LES-AIDS Model," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(1), pages 54-62.
  • Handle: RePEc:oup:ajagec:v:77:y:1995:i:1:p:54-62.

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    Cited by:

    1. Fang, Cheng & Beghin, John C., 2002. "Urban Demand for Edible Oils and Fats in China: Evidence from Household Survey Data," Journal of Comparative Economics, Elsevier, vol. 30(4), pages 732-753, December.
    2. Zhou, De & Yu, Xiaohua & Abler, David G. & Chen, Danhong, 2014. "Projecting Meat and Cereals Demand for China Based on a Meta-Analysis of Income Elasticities," GlobalFood Discussion Papers 168528, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    3. Jing You, 2014. "Dietary change, nutrient transition and food security in fast-growing China," Chapters,in: Handbook on Food, chapter 9, pages 204-245 Edward Elgar Publishing.
    4. Wang, Qingbin & Fuller, Frank & Hayes, Dermot & Halbrendt, Catherine, 1998. "Chinese Consumer Demand for Animal Products and Implications for U.S. Pork and Poultry Exports," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 30(01), pages 127-140, July.
    5. Fengxia Dong & Frank Fuller, 2010. "Dietary Structural Change in China's Cities: Empirical Fact or Urban Legend?," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 58(1), pages 73-91, March.
    6. Han, Tong & Cramer, Gail L. & Wahl, Thomas I., 1997. "Rural Household Food Consumption in China: Evidence from the Rural Household Survey," 1997 Annual Meeting, July 13-16, 1997, Reno\ Sparks, Nevada 35797, Western Agricultural Economics Association.
    7. Guo, Zizhen, 2015. "Labor supply and expenditures: econometric estimation from Chinese household data," ISU General Staff Papers 201501010800005388, Iowa State University, Department of Economics.
    8. repec:hal:journl:halshs-00973418 is not listed on IDEAS
    9. Hassan, Daniel & Monier-Dilhan, Sylvette & Orozco, Valérie, 2011. "Measuring Consumers' Attachment to Geographical Indications: Implications for Competition Policy," TSE Working Papers 11-225, Toulouse School of Economics (TSE).
    10. Hovhannisyan, Vardges & Shanoyan, Aleksan, 2018. "An Empirical Analysis Of Welfare Consequences Of Rising Food Prices In Urban China: The Easi Approach," 2018 Annual Meeting, August 5-7, Washington, D.C. 273987, Agricultural and Applied Economics Association.
    11. Chern, Wen S. & He, Fang & Chen, Jing, 1996. "Demand and Supply of Agricultural Products in Mainland China," Economics and Sociology Occasional Papers - ESO Series 243228, Ohio State University, Department of Agricultural, Environmental and Development Economics.
    12. repec:spr:empeco:v:55:y:2018:i:3:d:10.1007_s00181-017-1309-3 is not listed on IDEAS
    13. Chris Moore & Charles Griffiths, 2018. "Welfare analysis in a two-stage inverse demand model: an application to harvest changes in the Chesapeake Bay," Empirical Economics, Springer, vol. 55(3), pages 1181-1206, November.
    14. Junfei Bai & Jill J. McCluskey & Hainan Wang & Shi Min, 2014. "Dietary Globalization in Chinese Breakfasts," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 62(3), pages 325-341, September.
    15. Yu, Xiaohua & Abler, David, 2016. "Matching food with mouths: A statistical explanation to the abnormal decline of per capita food consumption in rural China," Food Policy, Elsevier, vol. 63(C), pages 36-43.
    16. Shehata, Emad Abd Elmessih, 2006. "تقدير عرض العمالة فى القطاع الزراعى المصرى
      [Estimating Labor Supply in the Egyptian Agricultural Sector]
      ," MPRA Paper 43445, University Library of Munich, Germany, revised Dec 2006.
    17. Jikun Huang & Jun Yang & Scott Rozelle, 2010. "China's agriculture: drivers of change and implications for China and the rest of world," Agricultural Economics, International Association of Agricultural Economists, vol. 41(s1), pages 47-55, November.
    18. Guang Wan, 1998. "Linear estimation of the nonlinear almost ideal demand system: a Monte Carlo study," Applied Economics Letters, Taylor & Francis Journals, vol. 5(3), pages 181-186.
    19. Chow, Clement K. W. & Fung, Michael K. Y. & Ngo, H. Y., 2001. "Consumption patterns of entrepreneurs in the People's Republic of China," Journal of Business Research, Elsevier, vol. 52(2), pages 189-202, May.
    20. Hongbo Liu & Kevin A. Parton & Zhang-Yue Zhou & Rod Cox, 2009. "At-home meat consumption in China: an empirical study ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 53(4), pages 485-501, October.
    21. Mendis, Sachintha & Hovhannisyan, Vardges, 2017. "Assessing Provincial-Level Demand For Food Quantity And Quality In China: An Easi Demand System Approach," 2017 Annual Meeting, February 4-7, 2017, Mobile, Alabama 252797, Southern Agricultural Economics Association.
    22. repec:gam:jsusta:v:11:y:2019:i:4:p:984-:d:205921 is not listed on IDEAS
    23. repec:pid:journl:v:55:y:2016:i:4:p:921-943 is not listed on IDEAS

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