Demand Systems with Unit Values: A Comparison of Two Specifications
Journal
Economics Letters
ISSN
0165-1765
Type
journal article
Date Issued
1998
Author(s)
Lahatte, A.
;
Laisney, François
;
Miquel, Ruth
;
Preston, I.
Abstract
not available in German The availability of quantity information along with expenditure information in some household surveys allows the estimation of price reactions on the basis of unit values. We compare two specifications that have been proposed in this context by Deaton (1990) and Crawford et al. (1997), in order to take account of quality effects reflected in the unit values. Using simulated data for a two-good model, and keeping Marshallian elasticities fixed, we compare true and pseudo-true quantity and quality elasticities. Expenditure elasticities are close, but we find large differences in price elasticities and even sign reversals. This suggests that, while convenient in the situation where prices are not observable, these specifications lack flexibility. Paper is downloadable at Elsevier
Language
English
HSG Classification
contribution to scientific community
Refereed
No
Publisher
North-Holland
Publisher place
Amsterdam
Volume
58
Start page
281
End page
290
Pages
10
Subject(s)
Division(s)
Eprints ID
15020