Bounding quantile demand functions using revealed preference inequalities

This paper develops a new approach to the estimation of consumer demand models with unobserved heterogeneity subject to revealed preference inequality restrictions. Particular attention is given to nonseparable heterogeneity. The inequality restrictions are used to identify bounds on counterfactual...

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Bibliographic Details
Published in:Journal of econometrics 2014-04, Vol.179 (2), p.112-127
Main Authors: Blundell, Richard, Kristensen, Dennis, Matzkin, Rosa
Format: Article
Language:English
Subjects:
Bounds
Consumer behavior
Consumer spending
Consumers
Demand
Demand models
Estimation
Expenditure
Inequality
Methodology
Quantile regression
Revealed preference
Studies
United Kingdom
Western Europe
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Summary:This paper develops a new approach to the estimation of consumer demand models with unobserved heterogeneity subject to revealed preference inequality restrictions. Particular attention is given to nonseparable heterogeneity. The inequality restrictions are used to identify bounds on counterfactual demand. A nonparametric estimator for these bounds is developed and asymptotic properties are derived. An empirical application using data from the UK Family Expenditure Survey illustrates the usefulness of the methods.
ISSN:0304-4076
1872-6895
DOI:10.1016/j.jeconom.2014.01.005