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Price and quantity endogeneity in demand analysis: evidence from directed acyclic graphs

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  • Zijun Wang
  • David A. Bessler

Abstract

We propose to use the emerging method of directed graphs to study price/quantity endogeneity issues in empirical demand analysis. The approach is illustrated through the examination of U.S. meat consumption. We find that for two major meat products (beef and poultry), retail prices contemporaneously caused quantities consumed, thus were predetermined. In contrast, the quantity consumed of pork appeared to be predetermined relative to its price.

Suggested Citation

  • Zijun Wang & David A. Bessler, 2006. "Price and quantity endogeneity in demand analysis: evidence from directed acyclic graphs," Agricultural Economics, International Association of Agricultural Economists, vol. 34(1), pages 87-95, January.
    • Handle: RePEc:bla:agecon:v:34:y:2006:i:1:p:87-95
    DOI: 10.1111/j.1574-0862.2006.00106.x
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    References listed on IDEAS

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    1. Moore, Henry Ludwell, 1914. "Economics Cycles: Their law and cause," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number moore1914.
    2. Jung, Jione & Koo, Won W., 2000. "An Econometric Analysis Of Demand For Meat And Fish Products In Korea," Agricultural Economics Reports 23122, North Dakota State University, Department of Agribusiness and Applied Economics.
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    Cited by:

    1. Mu, Jianhong E. & McCarl, Bruce A. & Bessler, David A., 2013. "Impacts of BSE and Avian Influenza on U.S. Meat Demand," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150392, Agricultural and Applied Economics Association.
    2. Zijun Wang & Andrew J. Rettenmaier, 2008. "Deficits, Explicit Debt, Implicit Debt, and Interest Rates: Some Empirical Evidence," Southern Economic Journal, John Wiley & Sons, vol. 75(1), pages 208-222, July.
    3. Fang, Xin & Huang, Hui & Leung, PingSun, 2018. "Competitiveness of local food: an empirical analysis of the tomato market dynamics," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 21(1).
    4. Xu, Xiaojie, 2014. "Causality and Price Discovery in U.S. Corn Markets: An Application of Error Correction Modeling and Directed Acyclic Graphs," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 169806, Agricultural and Applied Economics Association.
    5. Bessler, David A., 2013. "On Agricultural Econometrics," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 45, pages 1-8, August.
    6. Musumba, Mark & Sen Gupta, Rajorshi, 2011. "Price Transmission to Ugandan Coffee Growers in a Liberalized Market," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103906, Agricultural and Applied Economics Association.
    7. Peter G. Fennell & David O'Sullivan & Antoine Godin & Stephen Kinsella, 2014. "Visualising stock flow consistent models as directed acyclic graphs," Papers 1409.4541, arXiv.org.
    8. Etienne, Xiaoli L. & Hoffman, Linwood A., 2015. "Price Discovery and Risk Management in the U.S. Distiller’s Grain Markets," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205125, Agricultural and Applied Economics Association.
    9. Pozo, Veronica F. & Schroeder, Ted C., 2012. "Price and Volatility Spillover between Livestock and Related Commodity Markets," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124798, Agricultural and Applied Economics Association.
    10. Sukhdeep Singh & Indrani Chakraborty, 2021. "Growth of the Firms and Investments in Innovations: An Empirical Investigation of the Indian Manufacturing Industry," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 19(1), pages 87-122, March.
    11. Neill, Clinton L. & Lahne, Jacob, 2022. "Matching reality: A basket and expenditure based choice experiment with sensory preferences," Journal of choice modelling, Elsevier, vol. 44(C).
    12. Zijun Wang, 2010. "Directed graphs, information structure and forecast combinations: an empirical examination of US unemployment rates," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 29(4), pages 353-366.

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