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 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. Key words: commodity aggregation, Composite Commodity Theorem, composite demand, Generalized Composite Commodity Theorem, quantity-quality decomposition
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Reed, Albert J.; Levedahl, J. William; Clark, J. Stephen, Commercial Disappearance and Composite Demand for Food with an Application to U.S. Meats, Journal of Agricultural and Resource Economics, Volume 28, Issue 1, April 2003, Pages 53-70

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