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Bounding quantile demand functions using revealed preference inequalities

  • Richard Blundell


    (Institute for Fiscal Studies and IFS and UCL)

  • Dennis Kristensen


    (Institute for Fiscal Studies)

  • Rosa Matzkin


    (Institute for Fiscal Studies and UCLA)

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.

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Paper provided by Centre for Microdata Methods and Practice, Institute for Fiscal Studies in its series CeMMAP working papers with number CWP21/11.

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Date of creation: Jun 2011
Date of revision:
Handle: RePEc:ifs:cemmap:21/11
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