Consumer allocation models: Choice of functional form

Barten, Anton P.

doi:10.1007/bf01238883

Cited by 138 publications

(96 citation statements)

References 20 publications

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“…The test concluded in favor of the acceptance of the RM, rejecting the AIDS. The same conclusion obtained with Barten (1993)'s test. However, the authors warned that their finding could not be interpreted as an evidence of the superiority of the RM over the AIDS in a general way.…”

Section: Introductionsupporting

confidence: 84%

Time-varying parameters in the almost ideal demand system and the Rotterdam model: will the best specification please stand up?

Barnett

Kanyama

2013

Applied Economics

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This paper assesses the ability of the Rotterdam model and of three versions of the almost ideal demand system (AIDS) to recover the time-varying elasticities of a true demand system and to satisfy theoretical regularity. Using Monte Carlo simulations, we find that the Rotterdam model performs better than the linear-approximate AIDS at recovering the signs of all the time-varying elasticities. More importantly, the Rotterdam model has the ability to track the paths of time-varying income elasticities, even when the true values are very high. The linear-approximate AIDS, not only performs poorly at recovering the time-varying elasticities but also badly approximates the nonlinear AIDS.

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Section: Introductionsupporting

confidence: 84%

Time-varying parameters in the almost ideal demand system and the Rotterdam model: will the best specification please stand up?

Barnett

Kanyama

2013

Applied Economics

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“…The Rotterdam (Barten, 1964, Theil, 1965 model has been utilized in many other studies (e.g., Capps and Love, 2002), leading to comparisons of the two, such as in Barnett and Seck (2008), who compare the Rotterdam and both the regular AIDS and its linear approximation (the Linear Almost Ideal Demand System) based on Monte Carlo simulations. Whereas several attempts have been initiated to identify the most adequate system of demand, a point has been made that there is a difference between general applicability and actual fit to data in a specific case and that the best-performing model seems to depend on data rather than on universal criteria (Barten, 1993;Matsuda, 2005). The commonality, though, between different approaches to demand estimations lies in the urge to comply with economic theory, which yields second-order approximations to the underlying 'true' demand equations, but still theoretical guidance falls short in determining any sole undisputed specification of demand.…”

Section: Modelmentioning

confidence: 99%

“…First, format-specific elasticities of demand for milk products were conducted applying a synthetic demand system introduced by Barten (1993), which also nests the classical Almost Ideal Demand System (AIDS) and the Rotterdam demand system plus two intermediary models, the Central Bureau of Statistics (CBS) and the National Bureau of Research (NBR) model. As a counterpart, we examine a situation in which consumers frequent both supermarkets and discounters, investigating potential cross-format effects.…”

Section: Introductionmentioning

confidence: 99%

Price Sensitivity Within and Across Retail Formats

Widenhorn

Salhofer

2013

Agribusiness

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Applying a synthetic demand system approach, we examine if consumers in discount stores reveal different price elasticities of demand than those in conventional supermarkets. Based on a RollAMA dataset containing information on consumption in 12 different retail chains in Austria, we first analyze demand patterns for a scenario in which consumers only frequent either discounters or supermarkets, followed by an investigation of potential cross-format effects when both types of stores are visited. Our empirical findings suggest that for the three categories of milk products under examination, price elasticities in discount stores are generally higher. Beyond that, demand reactions in supermarkets with respect to price changes in discounters differ from the reverse case, i.e., from demand reactions in discounters when supermarket prices are changed. This is especially true for the case of drinking milk, which confirms the strategic potential of drinking milk as a loss leader product.

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“…A general differential approach (Barten, 1993;Fousekis and Revell, 2000;Kadjo and Seale, 2014) was employed here to examine the potato import demand relationships between Egypt and its major competitors in the two major importers of Egyptian potatoes in the EU, namely Germany and the UK. Use of a more general differential demand model approach is justified on the grounds that it offers more flexibility than some frequently used demand models such as the Rotterdam model specification, which assumes constant marginal budget shares.…”

Section: Potato Import Demand Modelmentioning

confidence: 99%

Determinants of import demand for Egyptian potatoes in Germany and the United Kingdom

Abouhatab

Surry

2016

Acta Hortic.

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The European Union (EU) is the major import market for Egyptian fresh potatoes. Germany and the United Kingdom (UK) jointly imported about 44% of Egyptian potato exports to the EU during the period 1994-2012. This study sought to identify the determinants of import demand for Egyptian potatoes in these two countries. A general differentiated demand system approach was used to estimate conditional potato import demand per country. For each country, it was assumed that the system of conditional import demand equations for potatoes is specified according to the sources of origin and also depends on all imported potato prices and total import potato expenditure. When estimated econometrically, this import demand model allows conditional price and expenditure elasticities to be derived. The econometric results indicated that with an estimated elasticity of 1.95, Egyptian potato exports responded significantly to total expenditure on imported potatoes by Germany. On the other hand, Egyptian potato exports to Germany did not exhibit significant price responses. In all cases but one, estimated conditional uncompensated price elasticities were not statistically different from zero. However, more interesting results were obtained concerning the price responses of Egyptian potato exports to the UK, whereby the conditional (uncompensated) direct elasticity of potato imports from Egypt to the UK (-0.71) showed an inelastic response to its own price. Furthermore, Egyptian potato exports seemed to compete on the UK market with potatoes originating from Israel and France, while they displayed complementarity with Dutch imports.

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Consumer allocation models: Choice of functional form

Cited by 138 publications

References 20 publications

Time-varying parameters in the almost ideal demand system and the Rotterdam model: will the best specification please stand up?

Time-varying parameters in the almost ideal demand system and the Rotterdam model: will the best specification please stand up?

Price Sensitivity Within and Across Retail Formats

Determinants of import demand for Egyptian potatoes in Germany and the United Kingdom

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