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Title:Demand Systems with Unit Values: A Comparsion of Two Specifications PDF Logo
Authors:Lahatte, Agénor
Miquel, Ruth
Laisney, François
Preston, Ian
Issue Date:1997
Series/Report no.:ZEW Discussion Papers 97-24
Abstract:The availability of quantity information along with expenditure information in some household surveys allows the estimation of price reactions on the basis of unit values. We compare two specifications that have been proposed in this context by Deaton (1990) and Crawford et al. (1997) in order to take account of quality effects reflected in the unit values. Using simulated data for a two-good model, and keeping Marshallian elasticities fixed, we compare true and pseudo-true quantity and quality elasticities. Expenditure elasticities are close, but we find large differences in price elasticities and even sign reversals. This suggests that, while convenient in the situation where prices are not observable, these specifications lack flexibility.
Subjects:consumer demand
unit values
quality
pseudo-true values
JEL:D11
D12
Document Type:Working Paper
Appears in Collections:ZEW Discussion Papers
Publikationen von Forscherinnen und Forschern des ZEW

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