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Product Aggregation Bias as a Specification Error in Demand Systems

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  • George C. Davis

Abstract

Inherent in all demand studies is some form of product aggregation which can lead to product aggregation bias. This article develops a simple procedure for incorporating product aggregation bias in demand systems that permits testing of product aggregation bias with a standard likelihood ratio test. An empirical illustration of the procedure demonstrates the importance of proper product aggregation. Copyright 1997, Oxford University Press.

Suggested Citation

  • George C. Davis, 1997. "Product Aggregation Bias as a Specification Error in Demand Systems," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(1), pages 100-109.
    • Handle: RePEc:oup:ajagec:v:79:y:1997:i:1:p:100-109
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    Citations

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    Cited by:

    1. Shumway, C. Richard & Davis, George C., 2001. "Does consistent aggregation really matter?," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 45(2), pages 1-34.
    2. Richards, Timothy J. & Patterson, Paul M., 1998. "Dynamic Complementarity In Export Promotion: The Market Access Program In Fruits And Vegetables," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 23(2), pages 1-19, December.
    3. Kevin Mongeon, 2015. "A Market Test for Ethnic Discrimination in the National Hockey League," Journal of Sports Economics, , vol. 16(5), pages 460-481, June.
    4. Suh, Dong Hee & Moss, Charles B., 2014. "Exploring Agricultural Production Systems: Interactions between the Crop and Livestock Sectors," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170149, Agricultural and Applied Economics Association.
    5. Jun, Iksu, 2011. "Aggregation Bias Found In Korean Demand For Imported Beef," Journal of Rural Development/Nongchon-Gyeongje, Korea Rural Economic Institute, vol. 34(2), pages 1-17, June.
    6. Washington, Andrew A. & Kilmer, Richard L., 2002. "The Derived Demand For Imported Cheese In Hong Kong," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 5(1), pages 1-12.
    7. Muhammad, Andrew & McPhail, Lihong Lu & Kiawu, James, 2012. "Do U.S. Cotton Subsidies Affect Competing Exporters? An Analysis of Import Demand in China," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 44(2), pages 1-15, May.
    8. Thomas A. Garrett, 2002. "Aggregated vs. disaggregated data in regression analysis: implications for inference," Working Papers 2002-024, Federal Reserve Bank of St. Louis.
    9. George C. Davis, 1999. "The science and art of promotion evaluation," Agribusiness, John Wiley & Sons, Ltd., vol. 15(4), pages 465-483.
    10. Muhammad, Andrew & Ngeleza, Guyslain K., 2009. "European Union preferential trade agreements with developing countries and their impact on Colombian and Kenyan carnation exports to the United Kingdom:," IFPRI discussion papers 862, International Food Policy Research Institute (IFPRI).
    11. Stewart, Hayden & Blisard, Noel, 2006. "Household versus Community Effects: Who Really Pays More for Food?," 2006 Annual meeting, July 23-26, Long Beach, CA 21053, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    12. Li, Wenying & Zhen, Chen, 2017. "A Reassessment of Product Aggregation Bias in Demand Analysis: An Application to the U.S. Meat Market," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258197, Agricultural and Applied Economics Association.
    13. Mutondo, Joao E. & Henneberry, Shida Rastegari, 2007. "A Source-Differentiated Analysis of U.S. Meat Demand," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 32(3), pages 1-19, December.
    14. Panos Fousekis & Christos Pantzios, 1999. "A Family of Differential Input Demand Systems with Application to Greek Agriculture," Journal of Agricultural Economics, Wiley Blackwell, vol. 50(3), pages 549-563, September.
    15. Hayden Stewart & Noel Blisard, 2008. "Who Pays More for Food?," Journal of Agricultural Economics, Wiley Blackwell, vol. 59(1), pages 150-168, February.
    16. Garrett, Thomas A., 2003. "Aggregated versus disaggregated data in regression analysis: implications for inference," Economics Letters, Elsevier, vol. 81(1), pages 61-65, October.

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