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Estimating a Demand System with Choke Prices

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  • Golan, Amos
  • LaFrance, Jeffrey T
  • Perloff, Jeffrey M.
  • Seabold, Skipper

Abstract

We present a new, information-theoretic approach for estimating a system of many demand equations where the unobserved reservation or choke prices vary across consumers. We illustrate this method by estimating a nonlinear, almost ideal demand system (AIDS) for four types of meat using cross-sectional data from Mexico, where most households did not buy at least one type of meat during the survey week. The system of de­mand curves vary across demo­graphic groups.

Suggested Citation

  • Golan, Amos & LaFrance, Jeffrey T & Perloff, Jeffrey M. & Seabold, Skipper, 2017. "Estimating a Demand System with Choke Prices," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt4qt9q8vr, Department of Agricultural & Resource Economics, UC Berkeley.
  • Handle: RePEc:cdl:agrebk:qt4qt9q8vr
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    References listed on IDEAS

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    Keywords

    Social and Behavioral Sciences; demand system; choke prices; generalized maximum entropy;

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