Blow, Laura; Browning, Martin and Crawford, Ian (2005) Revealed preference analysis of characteristics models. Review of Economic Studies. [Unpublished]
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Characteristics models have been found to be useful in many areas of economics. However, their empirical implementation tends to rely heavily on functional form assumptions. In this paper we develop a revealed preference approach to characteristics models. We derive the necessary and su¢ cient empirical conditions under which data on the market behaviour of heterogeneous, price-taking consumers are nonparametrically consistent with the consumer characteristics model. Where these conditions hold, we show how information may be recovered on individual consumer’s marginal valuations of product attributes. In some cases marginal valuations are point identi…ed and in other cases we can only recover bounds.
Where the conditions fail we highlight the role which the introduction of unobserved product attributes can play in rationalising the data. We implement these ideas using consumer panel data on the Danish milk market.
|EPrint Type:||Journal paper|
|Keywords:||product characteristics, revealed rpeference|
|Subjects:||"Organics" in general|
Food systems > Markets and trade
Values, standards and certification > Consumer issues
"Organics" in general > Country reports > Europe
|Research affiliation:||Denmark > DARCOF II (2000-2005) > III.1 (COF) Consumer demand for organic foods|
|Deposited By:||Rosenkvist, Lars|
|Deposited On:||30 Jun 2005|
|Last Modified:||12 Apr 2010 07:31|
|Refereed:||Submitted for peer-review but not yet accepted|
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