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Impact of Income on Price and Income Responses in the Differential Demand System

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  • Brown, Mark G.

Abstract

An extension of the Rotterdam model is developed that makes the model’s income flexibility and marginal propensities to consume varying coefficients. Frisch’s duality relationships that the second partial derivatives of demand with respect to income and prices are independent of the order of differentiation are imposed with the marginal propensities to consume specified as functions of income and price, and the Slutsky coefficients specified as functions of income only. A uniform substitute specification is used to analyze the conditional demands for a group of beverages.

Suggested Citation

  • Brown, Mark G., 2008. "Impact of Income on Price and Income Responses in the Differential Demand System," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 40(2), pages 1-16, August.
    • Handle: RePEc:ags:joaaec:47201
    DOI: 10.22004/ag.econ.47201
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    References listed on IDEAS

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    1. S. Ichimura, 1950. "A Critical Note on the Definition of Related Goods," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 18(3), pages 179-183.
    2. Byron, R. P., 1984. "On the flexibility of the Rotterdam model," European Economic Review, Elsevier, vol. 24(3), pages 273-283, April.
    3. Mark G. Brown, 1993. "Demand Systems for Competing Commodities: An Application of the Uniform Substitute Hypothesis," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 15(3), pages 577-589.
    4. Barnett, William A., 1984. "On the flexibility of the Rotterdam model : A first empirical look," European Economic Review, Elsevier, vol. 24(3), pages 285-289, April.
    5. Bouis, Howarth E., 1996. "A food demand system based on demand for characteristics: If there is 'curvature' in the Slutsky matrix, what do the curves look like and why?," Journal of Development Economics, Elsevier, vol. 51(2), pages 239-266, December.
    6. Brown, Mark G. & Behr, Robert M. & Lee, Jonq-Ying, 1994. "Conditional Demand And Endogeneity? A Case Study Of Demand For Juice Products," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 19(1), pages 1-12, July.
    7. Mountain, Dean C, 1988. "The Rotterdam Model: An Approximation in Variable Space," Econometrica, Econometric Society, vol. 56(2), pages 477-484, March.
    8. Henry W. Kinnucan & Yuqing Zheng, 2004. "Advertising's effect on the market demand elasticity: A note," Agribusiness, John Wiley & Sons, Ltd., vol. 20(2), pages 181-188.
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    Cited by:

    1. Hyeyoung Kim & Marisa Zansler & Lisa A. House, 2018. "Retail promotion with price cut and the imperfect price responses of orange juice demand in the U.S," Agribusiness, John Wiley & Sons, Ltd., vol. 34(2), pages 363-376, March.
    2. Xin Xu & Jayachandran N Variyam & Zhenxiang Zhao & Frank J Chaloupka, 2014. "Relative Food Prices and Obesity in U.S. Metropolitan Areas: 1976-2001," PLOS ONE, Public Library of Science, vol. 9(12), pages 1-22, December.
    3. Fleischer, Aliza & Peleg, Gil & Rivlin (Byk), Judith, 2011. "The impact of changes in household vacation expenditures on the travel and hospitality industries," Tourism Management, Elsevier, vol. 32(4), pages 815-821.
    4. Brown, Mark G., 2010. "Relationship between the Unemployment Rate and the Demand for Orange Juice," Research papers 104353, Florida Department of Citrus.
    5. Kim, Hyeyoung & Zansler, Marisa & House, Lisa A., 2016. "The imperfect price responses of orange juice demand in the U.S," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235511, Agricultural and Applied Economics Association.
    6. Adrian R. Fleissig, 2016. "Changing Trends in U.S. Alcohol Demand," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 44(3), pages 263-276, September.
    7. Brown, Mark G. & Lee, Jonq-Ying, 2011. "Some Further Discussion on the Price Index for The Almost Ideal Demand System: A Chain Price Index Approach," Research papers 121588, Florida Department of Citrus.

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