Effective global regularity and empirical modeling of direct, inverse and mixed demand systems
McLaren, Keith R.
Wong, K.K. Gary
10.4225/03/59389c6f8b29e
https://bridges.monash.edu/articles/journal_contribution/Effective_global_regularity_and_empirical_modeling_of_direct_inverse_and_mixed_demand_systems/5090071
In this paper, we utilize the notion of "effective global regularity" and the intuition stemming from Cooper and McLaren (1996)'s General Exponential Form to develop a family of "composite" (product and ratio) direct, inverse and mixed demand systems. Apart from having larger regularity regions, the resulting specifications are also of potentially arbitrary rank, which can better approximate non-linear Engel curves. We also make extensive use of duality theory and a numerical inversion estimation method to rectify the endogeneity problem encountered in the estimation of the mixed demand systems. We illustrate the techniques by estimating different types of demand systems for Japanese quarterly meat and fish consumption. Results generally indicate that the proposed methods are promising, and may prove beneficial for modeling systems of direct, inverse and mixed demand functions in the future.
2017-06-08 00:38:06
Mixed demands
1959.1/41721
Numerical inversion estimation method
Conditional indirect utility functions
2007
Effective global regularity
monash:7364