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Measuring Pre-Commited Quantities Through Consumer Price Formation

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  • Marsh, Thomas L.
  • Piggott, Nicholas E.

Abstract

We investigate how to theoretically and empirically measure pre-committed quantities through price formation utilizing translating in the consumer distance function. The translated consumer distance function is defined as a dual to the translated utility, indirect utility, and expenditure functions. Translating procedures also provide more general analytical means to incorporate pre- committed quantities (and other shift or demographic variables) into inverse demand systems. This approach yields a class of inverse demand functions that can nest most known functional forms. For example, the Inverse Generalized Almost Ideal Demand (IGAI) model can be formed by applying translating procedures to the Inverse Almost Ideal Demand model. An empirical example of the IGAI model with inferences on the translating parameters themselves is provided for illustrative purposes.

Suggested Citation

  • Marsh, Thomas L. & Piggott, Nicholas E., 2013. "Measuring Pre-Commited Quantities Through Consumer Price Formation," 2013 Conference (57th), February 5-8, 2013, Sydney, Australia 152165, Australian Agricultural and Resource Economics Society.
  • Handle: RePEc:ags:aare13:152165
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    File URL: http://purl.umn.edu/152165
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    Cited by:

    1. Rowland, Christopher S. & Mjelde, James W. & Dharmasena, Senarath, 2017. "Policy implications of considering pre-commitments in U.S. aggregate energy demand system," Energy Policy, Elsevier, vol. 102(C), pages 406-413.

    More about this item

    Keywords

    duality; distance function; price formation; food demand; translating; inverse demand system; inverse generalized almost ideal demand model; Consumer/Household Economics; Demand and Price Analysis; Research Methods/ Statistical Methods; C10; D11; D12;

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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