Commercial Disappearance and Composite Demand for Food with an Application to U.S. Meats

When elementary prices move strictly proportionately, aggregation over a group of diverse products is valid, and group demand responses can be decomposed into quality and quantity responses. This study shows that when relative elementary prices and group prices are stochastically independent, a simi...

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Bibliographic Details
Published in:Journal of agricultural and resource economics 2003-04, Vol.28 (1), p.53-70
Main Authors: Reed, Albert J., Levedahl, J. William, Clark, J. Stephen
Format: Article
Language:English
Subjects:
Beef
Commodities
commodity aggregation
composite commodity theorem
Composite demand
Consumers
Decomposition
Elasticity of demand
Expenditures
Food demand
Food products
generalized composite commodity theorem
Income elasticity of demand
Meat products
Meat quality
Meats
Per capita
Pork
Poultry
Price elasticity
Price elasticity of demand
Price indices
Prices
quantity-quality decomposition
Restrictions
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Summary:When elementary prices move strictly proportionately, aggregation over a group of diverse products is valid, and group demand responses can be decomposed into quality and quantity responses. This study shows that when relative elementary prices and group prices are stochastically independent, a similar decomposition is valid. Empirical results suggest consumers respond to changes in prices and income mostly by altering the quality of meat products. These findings imply that using commercial disappearance as a proxy for food demand can be misleading for policy analysis.
ISSN:1068-5502
2327-8285
DOI:10.22004/ag.econ.30719