Premium
A Synthetic Demand System: An Application to U.S. Consumer Demand for Rice and Selected Rice Substitutes
Author(s) -
Gao X.M.,
Wailes Eric J.,
Cramer Gail L.
Publication year - 1994
Publication title -
applied economic perspectives and policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.4
H-Index - 49
eISSN - 2040-5804
pISSN - 2040-5790
DOI - 10.2307/1349518
Subject(s) - almost ideal demand system , consumer demand , economics , agricultural economics , perception , market demand schedule , microeconomics , production (economics) , price elasticity of demand , neuroscience , biology
Abstract This article presents estimates of economic and demographic effects on the demand for rice and its complex carbohydrate substitutes: potatoes, bread, and pasta. Using a synthetic level version demand system which nests the Almost Ideal Demand System (AIDS) model, the level version Rotterdam model, and the Central Bureau of Statistics (CBS) model, the results indicate: (1) inelastic demand for all four goods; (2) significant cross‐price effects; and (3) all goods are Hicksian substitutes. The impacts of demographic variables, such as household size, age structure, region, ethic origin, and having nursing children are significant. Quality and consumer perception of rice as a healthy food are also important in explaining consumer demand.