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A revealed preference test of rationing

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  • Fleissig, Adrian R.
  • Whitney, Gerald

Abstract

This paper derives a revealed preference test for utility maximization under rationing and can detect, for which goods rationing is binding without specifying a functional form or imposing rationing constraints prior to estimation. For UK data from 1920–55, we find evidence of utility maximization under rationing with rationing binding for food and other services. Estimated virtual prices exceed observed food prices by 16.5% in 1947 and observed prices of other services by 10.9% in 1952.

Suggested Citation

  • Fleissig, Adrian R. & Whitney, Gerald, 2011. "A revealed preference test of rationing," Economics Letters, Elsevier, vol. 113(3), pages 234-236.
    • Handle: RePEc:eee:ecolet:v:113:y:2011:i:3:p:234-236
    DOI: 10.1016/j.econlet.2011.07.020
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    1. Varian, Hal R, 1982. "The Nonparametric Approach to Demand Analysis," Econometrica, Econometric Society, vol. 50(4), pages 945-973, July.
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    5. Jones, Barry E. & De Peretti, Philippe, 2005. "A Comparison Of Two Methods For Testing The Utility Maximization Hypothesis When Quantity Data Are Measured With Error," Macroeconomic Dynamics, Cambridge University Press, vol. 9(5), pages 612-629, November.
    6. Sonya Kostova Huffman & Stanley R. Johnson, 2004. "Impacts of Economic Reform in Poland: Incidence and Welfare Changes Within a Consistent Framework," The Review of Economics and Statistics, MIT Press, vol. 86(2), pages 626-636, May.
    7. E. Rothbarth, 1941. "The Measurement of Changes in Real Income under Conditions of Rationing," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 8(2), pages 100-107.
    8. Neary, J. P. & Roberts, K. W. S., 1980. "The theory of household behaviour under rationing," European Economic Review, Elsevier, vol. 13(1), pages 25-42, January.
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    11. Philippe de Peretti, 2005. "A Comparison Of Two Methods For Testing The Utility Maximization Hypothesis When Quantity Data Are Measured With Error," Post-Print halshs-00646809, HAL.
    12. Philippe de Peretti, 2005. "A Comparison Of Two Methods For Testing The Utility Maximization Hypothesis When Quantity Data Are Measured With Error," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00646809, HAL.
    13. Swofford, James L. & Whitney, Gerald A., 1994. "A revealed preference test for weakly separable utility maximization with incomplete adjustment," Journal of Econometrics, Elsevier, vol. 60(1-2), pages 235-249.
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    Citations

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    Cited by:

    1. Guy Barokas, 2020. "Identifying changing taste from demand data via golden eggs," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 54(1), pages 47-68, January.
    2. Adrian R. Fleissig & Gerald A. Whitney, 2014. "Estimating demand elasticities under rationing," Applied Economics, Taylor & Francis Journals, vol. 46(4), pages 432-440, February.
    3. Fleissig, Adrian R. & Whitney, Gerald A., 2015. "Belgium relief fund, post war food shortages and the “True” cost of living," Explorations in Economic History, Elsevier, vol. 58(C), pages 93-106.
    4. Ian Crawford & Matthew Polisson, 2015. "Demand Analysis with Partially Observed Prices," Discussion Papers in Economics 15/12, Division of Economics, School of Business, University of Leicester, revised Dec 2016.
    5. Fleissig, Adrian R. & Whitney, Gerald A., 2015. "A revealed preference test of rationing a Monte Carlo analysis," Economic Modelling, Elsevier, vol. 45(C), pages 207-211.
    6. Fleissig, Adrian R. & Whitney, Gerald, 2013. "Virtual prices and the impact of house rationing in Belgium on consumer choices," Explorations in Economic History, Elsevier, vol. 50(2), pages 308-315.

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    More about this item

    Keywords

    Afriat Inequalities; Generalized axiom of revealed preference; Rationing;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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