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A Comment on Consumer Demand Systems with Binding Non-Negativity Constraints

Author

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  • Michael R. Ransom

    (University of Ariizona and Princeton University)

Abstract

Wales and Woodland (1983) have proposed an econometric model to deal with non-negativity constraints in systems of demand equations. This paper points out the relationship between the Wales-Woodland model and the "simultaneous Tobit" model of Amemiya (1974). This relationship is important because Amemiya has proposed a simple estimation procedure that can be utilized for some cases of the Wales-Woodland model. The issue of internal consistency for models of this type is discussed. I point out that internal consistency for the Wales-Woodland model is equivalent to the second order condition for systems without quantity constraints.

Suggested Citation

  • Michael R. Ransom, 1985. "A Comment on Consumer Demand Systems with Binding Non-Negativity Constraints," Working Papers 572, Princeton University, Department of Economics, Industrial Relations Section..
    • Handle: RePEc:pri:indrel:192
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