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Bounding quantile demand functions using revealed preference inequalities

Author

Listed:
  • Richard Blundell

    (Institute for Fiscal Studies and University College London)

  • Dennis Kristensen

    (Institute for Fiscal Studies and University College London)

  • Rosa Matzkin

    (Institute for Fiscal Studies and UCLA)

Abstract

This paper develops a new technique for the estimation of consumer demand models with unobserved heterogeneity subject to revealed preference inequality restrictions. Particular attention is given to nonseparable heterogeneity. The inequality restrictions are used to identify bounds on quantile demand functions. A nonparametric estimator for these bounds is developed and asymptotic properties are derived. An empirical application using data from the U.K. Family Expenditure Survey illustrates the usefulness of the methods by deriving bounds and confidence sets for estimated quantile demand functions.

Suggested Citation

  • Richard Blundell & Dennis Kristensen & Rosa Matzkin, 2011. "Bounding quantile demand functions using revealed preference inequalities," CeMMAP working papers CWP21/11, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  • Handle: RePEc:ifs:cemmap:21/11
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    File URL: http://cemmap.ifs.org.uk/wps/cwp2111.pdf
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    References listed on IDEAS

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    JEL classification:

    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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