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Revealed preference analysis of characteristics models

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 [Unpublished]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 > Countries and regions > Europe
Research affiliation: Denmark > DARCOF II (2000-2005) > III.1 (COF) Consumer demand for organic foods
Deposited By: Rosenkvist, Lars
ID Code:5008
Deposited On:30 Jun 2005
Last Modified:03 Dec 2013 13:10
Document Language:English
Refereed:Submitted for peer-review but not yet accepted

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