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Questions tagged [demand-system-estimation]

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6 votes
2 answers
3k views

How to estimate if goods are complementary or substitutes when one good is always offered for free?

Usually whether two goods are complementary or substitutes can be measured by estimating cross-price elasticity of demand. If cross-price elasticity of demand is negative the two goods are ...
2 votes
2 answers
277 views

Ensuring positive shares in homothetic demand system estimation

I am performing a demand system estimation, and a counter-factual exercise which involves estimating demands at prices quite far from the observed ones. I know a priori that preferences are homothetic,...
2 votes
1 answer
257 views

Reasons for why slutsky matrix may be non symmetric

In demand system estimation, theoretically we require this matrix to be symmetric. This unfortunately is not the case most of the time. What are some reasons for why symmetry of the slutsky matrix may ...
2 votes
0 answers
89 views

How to read/estimate Demand System on data

I have difficulties understanding the concept of Almost Ideal Demand System or, most probably, I have a problem of how to perform microeconomic estimates from data, in general... So my data look like ...
2 votes
0 answers
31 views

Interpretation of more than one cross price elasticity of demand

I am writing an empirical paper and use cross sectional data to estimate elasticities using an "almost ideal demand system" by Deaton and Muellbauer (1980) using Stata. My question concerns ...
0 votes
1 answer
106 views

Demand Curve Price not perfectly elastic

I'm trying to make the argument that our Sales go up when prices for all our Products are 30% off. Which I believe should be our new Regular Price. but our Demand Curve doesn't support this. Should I ...
1 vote
1 answer
36 views

Checking negativity condition in demand system model

Let's assume you want to estimate a demand system model, e.g. the AIDS, based on observational data. Then you usually test first whether the homogeneity and symmetry condition hold in order to check ...
0 votes
1 answer
92 views

Relative prices in demand system estimation

Context/ Setup: Microeconometrics offers many tools to study features of the demand for different goods/ groups of goods, such as the well known Almost Ideal Demand System (AIDs). The AIDs model ...
1 vote
0 answers
55 views

Data-driven vs. theory-driven demand system estimation

Context: When one wants to study consumer demand based on observational data (e.g. household survey data), imposing theoretical restrictions on the coefficients of the demand model seems to be a good ...
1 vote
1 answer
71 views

Is it possible to get a demand function as function of income and utility from this log linear indirect utility?

I have this indirect utility function: $$v=-c\frac{p^{(-β+1)}}{(-\beta+1)}+\frac{y^{(-\gamma+1)}}{(-\gamma+1)}$$ with constraint Y = c + pq I have posted before about getting the utility function from ...
2 votes
1 answer
71 views

Reference on nonparametric econometrics

I am looking for a fairly recent treatment of non parametric econometric methods. Something which can help me make sense of, for instance Hausman Newey Econometrica 2016 I did find some references on ...
0 votes
1 answer
69 views

Demand as a function of supply and storage

I'm trying to model a situation where demand is a function of the supply of medical equipments. The equipment costs are already covered, hence price is not taken into consideration. The supply however ...
2 votes
1 answer
69 views

Concept of Utility in demand systems

I have seen that researchers use different utility function in demand systems estimation such as Stone Geary. What is the role of these utility functions? What are utility function other than stone ...
2 votes
1 answer
121 views

Approaches in demand analysis

What is the difference between Engel Curve and the system approach of demand analysis?
0 votes
1 answer
99 views

What are the advantages of using demand systems estimation? How is this different from individual demand estimation for product?

I don't understand how is demand systems estimation is different from simple demand equation estimation. What's the best resource for getting a history line of demand systems?
5 votes
0 answers
55 views

In the BLP paper, why interacting consumer characteristic with product characteristic can generate more desirable substitution pattern

Got a question about the famous BLP paper (http://people.stern.nyu.edu/wgreene/Econometrics/BLP.pdf). When there is no interaction between product characteristic and consumer characteristic, the ...
4 votes
0 answers
60 views

Endogeneity in demand estimation using demand systems estimations

Assume I have quantities and prices for J products across M markets in T periods. I want to estimate their elasticities. I construct J regressions of this type: $$\log \left(q_{j m t}\right)=\alpha_{t}...
2 votes
0 answers
36 views

Recovering information on Prices from Expenditure data

this is more of a "Research Based" Question where the answer may be open ended and really am wondering from all the experts here. Feel free to hammer me on this as I'm not 100% confident, my data work ...
1 vote
0 answers
31 views

How to simulate changes in quantity demanded when several prices change?

I am not sure if this is a straightforward question or not. Basically, I have a set of products along with their prices and quantities demanded. I also have own and cross price elasticities for each ...
3 votes
0 answers
35 views

Resources on the Rotterdam demand system

I've been doing some self study on the Almost Ideal Demand System, and have been hearing a lot about the Rotterdam demand system developed by Henri Theil. I've been looking for resources on google ...