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Group Demand I: Main Results

In: Short-cut Demand Elasticities and Other Convenient Approaches to Consumer Demand

Author

Listed:
  • Kenneth W. Clements

    (University of Western Australia)

  • Haiyan Liu

    (University of Western Australia)

  • Marc Jim M. Mariano

    (Commonwealth Scientific and Industrial Research Organisation)

  • Eliyathamby A. Selvanathan

    (Griffith University)

  • Saroja Selvanathan

    (Griffith University)

  • George Verikios

    (Griffith University)

Abstract

Consumers usually purchase a huge number of goods and service each year. To manage the high-dimensional choice problem, consumers often allocate income to broad groups before deciding how much to spend on individual items within each group. This is known as two-stage budgeting. This chapter introduces the utility foundations of this approach. This leads to demand equations for groups of goods and services, as well as conditional demands for within-group allocations. The theory is illustrated with an econometric application to the demand for beer, wine, and spirits.

Suggested Citation

  • Kenneth W. Clements & Haiyan Liu & Marc Jim M. Mariano & Eliyathamby A. Selvanathan & Saroja Selvanathan & George Verikios, 2025. "Group Demand I: Main Results," Springer Books, in: Short-cut Demand Elasticities and Other Convenient Approaches to Consumer Demand, chapter 0, pages 147-159, Springer.
    • Handle: RePEc:spr:sprchp:978-981-96-3588-7_8
    DOI: 10.1007/978-981-96-3588-7_8
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