Department of Agricultural and Resource Economics, UCB
Estimating a Demand System with Choke Prices
- Author(s): Golan, Amos
- LaFrance, Jeffrey T
- Perloff, Jeffrey M.
- Seabold, Skipper
- et al.
Published Web Locationhttps://are.berkeley.edu/~jperloff/PDF/chokeprice.pdf
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.