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Distinguishing between Market Participation and Infrequency of Purchase Models of Butter Demand
Author(s) -
Blisard Noel,
Blaylock James
Publication year - 1993
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1242915
Subject(s) - consumption (sociology) , product (mathematics) , economics , zero (linguistics) , consumer expenditure , econometrics , test (biology) , function (biology) , microeconomics , business , advertising , public economics , mathematics , social science , linguistics , philosophy , geometry , aggregate expenditure , sociology , paleontology , evolutionary biology , biology
Household butter expenditures are modeled by market participation and infrequency‐of‐purchase specifications. The market participation model assumes that zero expenditures represent either traditional corner solutions or consumers who never use the product, whereas the infrequency‐of‐purchase model assumes that zero expenditures represent either corner solutions or consumption out of storage. We determine that the infrequency‐of‐purchase specification is preferred to the market participation model by applying a nonnested test based upon likelihood functions. If household expenditure surveys contained information about participation and frequency of purchase, a likelihood function which contained both models could be written and estimated.