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Estimation of a Two-Level Demand System with Limited Dependent Variables

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  • Steven T. Yen
  • Terry L. Roe

Abstract

A two-level demand model was derived from a strongly separable conditional indirect utility function to analyze Dominican rural and urban household consumption at different income levels. For samples with significant zero consumption, a multivariate limited dependent variable model utilizing the concept of virtual prices was used to obtain consistent estimates of consumption parameters. Results show that households with higher incomes tend to be less responsive to own-price and income changes in consumption of most food and nonfood commodities. For demographic variates, the elasticities of rice and aggregate food with respect to household composition variables are all positive with few exceptions.

Suggested Citation

  • Steven T. Yen & Terry L. Roe, 1989. "Estimation of a Two-Level Demand System with Limited Dependent Variables," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(1), pages 85-98.
    • Handle: RePEc:oup:ajagec:v:71:y:1989:i:1:p:85-98.
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    File URL: http://hdl.handle.net/10.2307/1241777
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    Cited by:

    1. Carson, Richard & Flores, Nicholas E. & Hanemann, W. Michael, 1998. "Sequencing and Valuing Public Goods," Journal of Environmental Economics and Management, Elsevier, vol. 36(3), pages 314-323, November.
    2. Vassilopoulos, Achilleas & Klonaris, Stathis & Drichoutis, Andreas C. & Lazaridis, Panagiotis, 2012. "Modeling quality demand with data from Household Budget Surveys: An application to meat and fish products in Greece," Economic Modelling, Elsevier, vol. 29(6), pages 2744-2750.
    3. GianCarlo Moschini, 2001. "A Flexible Multistage Demand System Based on Indirect Separability," Southern Economic Journal, John Wiley & Sons, vol. 68(1), pages 22-41, July.
    4. Dey, Madan Mohan & Garcia, Yolanda T. & Kumar, Praduman & Piumsombun, Somying & Haque, Muhammad Sirajul & Li, Luping & Radam, Alias & Senaratne, Athula & Khiem, Nguyen Tri & Koeshendrajana, Sonny, 2008. "Demand for fish in Asia: a cross-country analysis," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 52(3), pages 1-18.
    5. Helen Jensen & Justo Manrique, 1998. "Demand for food commodities by income groups in Indonesia," Applied Economics, Taylor & Francis Journals, vol. 30(4), pages 491-501.
    6. Gould, Brian W., 1996. "Factors Affecting U.S. Demand For Reduced-Fat Fluid Milk," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 21(1), pages 1-14, July.
    7. Ishdorj, Ariun, 2008. "Essays on food assistance program participation and demand for food," ISU General Staff Papers 2008010108000016750, Iowa State University, Department of Economics.
    8. Hoehn, John P., 1992. "Natural Resource Damage Assessment and Contingent Valuation: Issues and Research Needs," Staff Paper Series 201153, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    9. Gould, Brian W. & Lee, Yoonjung & Dong, Diansheng & Villarreal, Hector J., 2002. "Household Size And Composition Impacts On Meat Demand In Mexico: A Censored Demand System Approach," 2002 Annual meeting, July 28-31, Long Beach, CA 19722, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    10. Ishdorj, Ariun & Jensen, Helen H., 2008. "Bayesian Estimation of a Censored AIDS Model for Whole Grain Products," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6075, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    11. Dong, Diansheng & Gould, Brian W., 1999. "A Double-Hurdle Model Of Food Demand With Endogenous Unit Values," 1999 Annual meeting, August 8-11, Nashville, TN 21635, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    12. Ishdorj, Ariun & Jensen, Helen H., 2010. "Demand For Breakfast Cereals: Whole Grains Guidance And Food Choice," 115th Joint EAAE/AAEA Seminar, September 15-17, 2010, Freising-Weihenstephan, Germany 116445, European Association of Agricultural Economists.
    13. Gould, Brian W., 1995. "Factors Affecting U.S. Demand For Reduced-Fat Milk," Staff Papers 12646, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.
    14. Majumder, Amita & Chakrabarty, Manisha, 2003. "Relative cost of children: the case of rural Maharashtra, India," Journal of Policy Modeling, Elsevier, vol. 25(1), pages 61-76, January.
    15. Randall, Alan & Hoehn, John P., 1993. "Embedding Effects in Contingent Valuation," Staff Paper Series 201164, Michigan State University, Department of Agricultural, Food, and Resource Economics.

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