Estimation Of Demand Function Research Articles

Ind

The objective of this study is to evaluate the impact of sawn timber export tax increase on investment in sawn timber industry. Sawn timber industry analyzed is limited to the sawmill belongs to the forest concession. The demond function for investment in sawn timber industry are evaluated as basis for impact estimation, using time series analysis, to estimate demand function for net investment (in(t)) in sawn timber industry. A distributed lag model was used. The result of the distributed lag model shows that the sawn timber export tax policy caused this industry adjust their investment in 1.3 years. The increase of sawn timber export tax rate to 78.3% at the and of 1989 had caused a decrease demand for net investment of sawn timber industry about Rp 222.970 billion (constant price 1983) and Rp 132,798 billion (constant price 1983) in 1990 and 1991, or about 50% respectively. The imposition of high sawn timber export tax rate as an effort to the development of wood finished product export, has not effective . sawn timber export tax policy hance have to be reviewed. International market for wood finished product, furniture in particular, is very competitive, consequently, for the success of finished product export, a strong marketing network, high quality product, and a better knowledge about market characteristic are needed in this regard the government support to wood finish product export should focuse on human resource development i.e providing skill labor in processing and marketing of wood finished product.

Modelling quantitative trade restrictions: Rationing in the Rotterdam model

We develop methods of identifying if, following the imposition of a quantitative import restriction, consumers are rationed, and of allowing for this in the estimation of demand functions. We model demand with the Rotterdam model. The methods are based on Neary and Roberts' model of rationing and rely on identifying differences in the stochastic structure of demand under rationing and market clearing. By way of example we consider the demand-side effects of the voluntary export restraint imposed during the 1970s and 1980s on Comecon exports of women's and children's leather footwear to the UK. The methodology developed is equally applicable to the case where import prices rise to clear excess demand, leaving suppliers facing a quantity ration.

THE DEMAND FOR WAGERING ON STATE-OPERATED LOTTO GAMES

A number of studies have attempted to estimate demand functions for state-operated lottery games, usually with quarterly or annual data. A few include the price of a lottery bet as an independent variable, with generally unsatisfactory results. This is because the price of a lottery bet will be roughly constant over quarterly or annual time intervals. Focusing on one type of lottery game (lottos), we show that if the demand for betting on lottos is estimated on a drawing-by-drawing basis, a price variable can be included on the right-hand side. Doing so allows us to estimate a true demand function and to compute price elasticities. As a result, we can evaluate the extent to which state lottery agencies have structured their lotto games so as to maximize tax revenues.

Passengers’ choice of airline under competition: the use of the logit model

The continued liberalization of the airline market in the European Community offers the prospect of competition in terms of price, frequency of service and many other attributes. Understanding these factors that influence passenger demand and incorporating them into a demand function poses a substantial theoretical and empirical challenge. A basis for estimating demand functions is the logit model. This paper examines the value of a logit share model in explaining how the share of airlines between airports varies as a function of measured and unmeasured attributes. It shows how demand functions are necessary for understanding a competitive market and evaluates the progress to date in identifying accurate coefficients of the logit function.

The Willingness to Pay for Education for Daughters in Contrast to Sons: Evidence from Rural Peru

In most of the developing world the education of women lags behind that of men. This could come about from a lack of parental desire for educated daughters or from a perception by the parents that there is a lower net return to education for girls. The relation between gender and education in rural Peru is explored using data from the 1985-86 Peru Living Standards Survey. A model of educational choice is developed. The estimated demand functions are used to assess the impact of user fees on demand and revenues. The empirical evidence indicates that parents are more willing to pay for reduced travel time to secondary school for boys than for girls. However, parents are willing to pay increased fees for girls' schooling sufficient to generate teachers' salaries. Copyright 1992 by Oxford University Press.

Estimating Visitor Use-Value of Arboreta: The Case of the University of Tennessee Arboretum2

Abstract Many studies have estimated demand functions for visits to recreation sites. Several included commonly defined recreation-based areas such as beaches, parks, lakes and rivers, but excluded examination of horticulturally significant sites such as botanic gardens and arboreta. This study estimates user-demand and consumer surplus for visits to the University of Tennessee Arboretum by the travel cost method. Results suggest that travel cost and income of consumers are important determinants of demand, at least in the case of visits to the University of Tennessee Arboretum, and that consumer-use value may be derived from this demand. Consumer-use value is estimated to be $20.43 per person.

The Econometrics of Kinked Budget Constraints

In the last several years, a branch of applied econometrics has developed that is devoted to the development of techniques for the estimation of demand and other functions when the budget constraint is “piecewise-linear,” or “kinky”—that is, when the constraint consists of a number of segments joined together at kink points. Such constraints most frequently arise from government tax and transfer programs. But kinked constraints sometimes arise in nongovernment contexts, a well-known example being the block pricing schedule commonly set by utilities and volume discounting in general. Kinked budget constraints create two difficulties. First, changes in tax and transfer schedules can have unexpected effects that can be exactly the opposite in sign to those expected from economic theory. Examples of this phenomenon are given below. Second, kinked budget constraints make the estimation of demand functions quite difficult.

The demand for retailer‐financed instalment credit: An econometric analysis

AbstractDuring the mid‐ to late 1980s the UK's Chancellor of the Exchequer has attempted to reduce the volume of consumer credit extended by increasing interest rates rather than by re‐introducing terms controls. This paper presents estimates of demand functions for new credit extended by retailers which was financed by them and repaid by instalments. Following earlier papers, a stock‐adjustment model is presented that is extended to allow for credit rationing. The results suggest that the demand for such new credit extended is related negatively to terms control and positively to personal disposable income and expectations. Demand was not found to be related to (a proxy for) the nominal interest rate charged by retailers (although it was found to be positively related to the real rate). The former finding is consistent with questionnaire evidence that consumers are unaware of the interest rate that they pay for credit. Elasticities of demand are presented.

Monetary Policy in the Philippines During Periods of Financial Crisis and Changes in Exchange Rate Regime: Targets, Instruments, and the Stability of Money Demand

This paper examines some of the key issues in the conduct of Philippine monetary policy since 1984, including the various shocks to the economy and the monetary authorities` choice of intermediate policy targets and instruments used to achieve those targets. Against this background, estimates of demand functions for various categories of monetary aggregates and tests of stability are reported. A monetary model of exchange market pressure is also estimated. The results suggest that even after the adoption of a floating exchange rate system, the authorities allowed changes in foreign reserves to continue to absorb most of the exchange market pressure.

Consumer‐use valuation of the university of Tennessee arboretum

Abstract Many studies have estimated demand functions for visits to recreation sites. Several have included commonly defined recreation‐based areas such as beaches, parks, lakes, rivers, and urban forest recreation sites. This study estimates user demand and consumers’ surplus for visits to the University of Tennessee Arboretum by the travel cost method. Results suggest that travel cost and income of consumers are important determinants of demand, at least in the case of visits to the University of Tennessee Arboretum. Consumer‐use value is estimated to be $20.43 per person.

A new paradigm for valuing non-market goods using referendum data: Maximum likelihood estimation by censored logistic regression

This paper challenges the W. M. Hanemann [ Amer. J. Agr. Econom. 66, 332–341 (1984)] and C. Sellar, J. P. Chavas, and J. R. Stoll [ J. Environ. Econom. Management 13, 382–390 (1986)] utilizations of logit models to estimate the value of non-market resources from “referendum” survey data. These data are more informative than conventional choice data. The “random utility” interpretation of logit models is therefore too restrictive. Bypassing the utility function entirely, it will be shown that parameters and standard errors for utility-theoretic inverse Hicksian demand functions can be extracted directly and much more simply. Estimated demand functions need not be limited to those corresponding to the linear-in-parameters utility difference specifications which can be handled by packaged logit programs.

Market Shares and Price-Quality Relationships: An Econometric Investigation of the U. S. Automobile Market

The objective of this paper is to investigate the role of marketing competition in the NorthAmerican automobile market. This is accomplished by estimating a market-share demand function. The main difficulty with the analysis of demand for automobiles is heterogeneity of model types. Quality differences among different models, both at a point in time and through time cannot be ignored, since price and sales depend on them. One way to remedy this situation is to apply the hedonic method by regressing the price of a model on its characteristics. In this way, the implicit prices for each of the qualitative attributes are derived and then used, free of quality-differences, in the second stage estimation of a market-share demand function. There has been considerable interest in estimating demand functions for automobiles. However, most of the previous research has focused on total automobile demand. In this approach, equations on total sales are estimated without taking into account differences in quality characteristics of different model types. These studies usually relate the depreciation of the service level of the currently held stock of automobiles to the demand for new stock. This leads to a very general stock adjustment [7] or generalized acceleration framework [10]. The best known time-series studies of the aggregate automobile demand using different variants of this approach are those of Chow [2], Suits [15], Wykoff [19], and Westin [18]. The estimates of price elasticities from these studies are about - 1, and income elasticities range from 1.5 to 4. Previous research on automobile demand allowing for qualitative differences in characteristics among different models is much less extensive. The most important research effort in this direction is the paper by Cowling and Cubbin [4]. They explained market-share movements for different car manufacturers by changes in quality adjusted prices using data from England for the period 1957-1968. Their quality adjusted price vector is proxied by the residuals from hedonic price regressions, using the data on manufacturer's models. The idea that the residuals from the regression of prices of differentiated goods on their qualitative attributes are the quality adjusted prices, was suggested by Griliches [8]. Cowling and Cubbin used, as their quality-adjusted price for a specific manufacturing firm, the mean residual computed by taking into account all the models offered by

On-site samples' regression: Problems of non-negative integers, truncation, and endogenous stratification

The paper corrects an estimation problem that has not yet been recognized in previous estimates of demand functions using on-site samples. There are three kinds of problems that one faces in on-site samples, namely, non-negative integers, truncation and endogenous stratification. Two theoretically correct maximum likelihood methods are developed based on two different assumptions about the variable distribution: the normal distribution and the Poisson distribution. A simulation is performed to compare the two methods using generated data sets of known models. We should not use OLS and instead should use the maximum likelihood methods developed here to estimate demand functions that use on-site samples. If forecasting is the purpose of estimation, then the simulation indicates that the Poisson ML method may be better.

Tests of Competing Theories of Consumer Choice and the Representative Consumer Hypothesis

Tests of Competing Theories of Consumer Choice and the Representative Consumer Hypothesis In this paper, the authors estimate demand functions for individual agents. They test if commonly-used functions are consisten t with the data and if parameters are the same across subjects. The y examine decision rules based on random choice, psychological and bi ological models of choice, and utility functions commonly employed in the economics literature. A generalized minimum-needs hypothesis per forms well across experimental conditions and individual subjects. St atistically significant differences in tastes across subjects were id entified in the data. Copyright 1987 by Royal Economic Society.

The demand for wheat under non-linear pricing in Pakistan

It is common for economic agents to face non-linear pricing schedules. This poses difficulties for the estimation of demand functions but also advantages in that we have price variation in a cross-section. We illustrate this with two examples from Pakistan: the urban rationing of wheat and the demand for wheat by rural households that produce and consume wheat. In the first case consumers have to pay higher prices for purchases above the ration, and in the second buying and selling prices differ. Demand elasticities are estimated using maximum likelihood methods. These estimates are considerably different from those obtained using standard LES assumptions.

Welfare Evaluation and Household Production with Non-Constant Returns to Scale

A recent body of literature examining energy-consuming durables investment [2; 3; 4] has fused the household production and utility maximization models to estimate demand functions for end-use products such as heated water and air. All of these studies have made the seemingly necessary simplifying assumption that the household production functions exhibit constant returns to scale (CRS). This assumption provides for a linear budget constraint, a necessary condition for deriving demand functions. However, since it is unlikely that all the household production functions in fact closely approximate CRS, serious measurement error may occur. It is the purpose of this paper to prove that the CRS assumption is unnecessary. A marginal benefit function for end-use products, which is analogous to a Marshallian demand function, can be derived and estimated under a non-linear budget constraint. These demand functions for end-use products are useful in measuring the welfare effects of government programs, for example, rebates for purchases of high efficiency appliances.' It will be shown that measures of consumer's surplus, both Marshallian and exact, can also be estimated under non-linear budget constraints. In sections II and III, we formally derive a marginal benefit function and explain how it and consumer's surplus can be observed. In section IV, Shephard's lemma and Roy's identity are modified to account for the non-linear budget constraint and a method of deriving exact consumer's surplus is shown. Section V is an illustrative example of the described process and section VI concludes the paper.

An Almost Ideal Demand System for Housing Attributes

In recent articles, Mendelsohn [16] and Palmquist [20] use restricted versions of Rosen's [22] model of household behavior to consistently estimate demand functions for attributes of a differentiated product. Rosen's [22] model is of a single market for such a product, and he proposes a two-step technique to estimate attribute demand functions. First, a single hedonic price function is estimated for the differentiated product. Attribute prices are the first derivatives of the fitted hedonic price function with respect to the relevant attributes. Second, demand functions for attributes are estimated using the prices imputed in the first step.' If the hedonic price function estimated in the first step is linear, then there is no price variation for attributes, and demand functions cannot be estimated. If the hedonic price function is nonlinear, then there is price variation. But, it is endogenous to households, since in a single market, price and attribute quantity are chosen jointly.2 Indeed, within market price variation will always be endogenous. In either case, without sufficient restriction on the model, the parameters of the demand functions for attributes cannot be consistently estimated using Rosen's [22] method.3 Mendelsohn [16] and Palmquist [20] assume that there are many markets for the differentiated product and that households with like preferences may be observed in the different markets. By this restriction households face price variation across markets that is exogenous, whether hedonic price functions are linear or nonlinear. If so, demand functions can be consistently estimated.4

Assets and Debts in a Consumer Portfolio

Data from the 1977–78 Survey of Consumer Credit provide the opportunity to estimate demand functions for owned housing, home mortgages, car stocks, car debts, and other debts in the context of a portfolio model with both own‐ and cross‐partial adjustments. Consequently, information is gained as to how households adjust their demands for owned housing, mortgage, car stocks, car loans, and other debts in response to disequilibria in their asset and debt portfolio. Married with spouse present, female headed, and black families are studied separately. Income, life‐cycle, and family size effects are estimated as well as the speeds of adjustment to various disequilibria.

THE ESTIMATION AND APPLICATION OF MULTI‐REGIONAL ECONOMIC PLANNING MODELS USING DATA ENVELOPMENT ANALYSIS

ABSTRACT This paper is concerned primarily with the problems of estimating the production possibility parameters of multiregional economic planning models of a mathematical programming form. It reviews and illustrates a technique known as Data Envelopment Analysis (DEA) and examines the application of this technique to the problem of production function estimation. The standard use of DEA for measuring relative efficiencies of production units is noted. A method for generating input demand and output supply functions using data envelope parameters is presented. Some comments are made about the ‘missing facet problem’, which effects this method's reliability, and a procedure for avoiding the problem is outlined. An alternative approach to supply and demand function estimation based on activity coefficient data is described. Two methods for measuring the relative effectiveness of production units are also presented. Finally, a strategy for using DEA to provide a streamlined activity analysis coefficient matrix for multiregional economic planning models is suggested, and some questions on the practical application and theoretical applicability of DEA‐estimated models are considered.

Women's Employment Issues: Discussion

This discussion consists of two parts: (a) a methodological perspective on the employment of women in agriculture obtained from the new home economics and (b) comments on the three papers presented here, papers which present different perspectives. The new home economics is an extension of neoclassical economics that provides a framework for modeling a wide range of decisions made by households in developing and developed countries. The basic idea underlying the new home economics is that households are not just consuming units but that they are productive, transforming inputs of human time and other resources into commodities that adult household members wish to consume, e.g., number of children, child quality or health, meals, etc. (Michael and Becker; Nerlove). The basic concept of the new home economics can be incorporated into a neoclassical model of decision making by agricultural households on farm and household inputs, including labor, and farm outputs. These households are assumed to have a single utility function (Nerlove; Becker, chap. 8). Households face three types of constraints. First, the household receives an endowment of time of each of its adult members (children are excluded as a simplification) which it considers allocating among own-farm work, off-farm work, housework, and leisure. The time of husbands and wives are treated as heterogenous because skill and biological differences are accounted for separately. Second, the household in general receives income from sale of farm output, off-farm wage work of its members, and nonfarm nonwage income and spends it on inputs for farm and household production (assuming no saving). Third, the properties of the farm-household production function constrain the efficiency of transforming inputs into consumption goods and outputs for sale. Environmental factors and technology affect the efficiency of production. Nonfamily hired labor and family labor are treated as separate inputs because of skill and reward differences. Farm households' choices of inputs and outputs are determined by household utility maximization subject to constraints on time, income, and production. The demand for husband's and wife's farm work, housework, and leisure; supply of their off-farm work; and demand for other inputs and supply of farm outputs are determined by prices of market inputs, prices of farm outputs, off-farm wage rates, nonwage-nonfarm income, and environmental and technological factors. These extended neoclassical models provide a rigorous framework for modeling household choices on women's hours of work outside the household. It suggests that these decisions are made jointly with other household decisions, including number of children. Given that husbands and wives are not identical in their work related skills, the model implies that households increase the size of their consumption set by having husbands and wives specialize in work activities according to their relative comparative advantage. The model is rich in suggesting variables to guide empirical studies of time allocation, but it generally provides few comparative static predictions that can be tested directly against empirical estimates. The model permits corner solutions where optimal hours of work are zero, and then provides a framework for analyzing the dichotomous participation decision. Empirical studies by Evenson and by Huffman and Lange have applied the methodology to estimate demand functions for women's farm labor for Philippine and U.S. farm women, respectively. These studies plus Rosenzweig's study for India report estimates of women's off-farm labor supply functions. These studies suggest that noninstitutional variables can successfully explain many of the differences in how women allocate their time across countries and over time. The Hart paper raises interesting issues about rice yields across two countries, Java and Bangladesh. Although she attributes most differences in growth of rice output to differThe author is a professor of economics, Iowa State University. Journal Paper No. J-1118 of the Iowa Agriculture and Home Economics Experiment Station, Project 2314.