Journal Article

Revealed Preference Analysis of Characteristics Models

Laura Blow, Martin Browning and Ian Crawford

in The Review of Economic Studies

Published on behalf of Review of Economic Studies Ltd

Volume 75, issue 2, pages 371-389
Published in print April 2008 | ISSN: 0034-6527
Published online April 2008 | e-ISSN: 1467-937X | DOI: http://dx.doi.org/10.1111/j.1467-937X.2008.00485.x
Revealed Preference Analysis of Characteristics Models

More Like This

Show all results sharing these subjects:

  • Household Behaviour and Family Economics
  • Single Equation Models; Single Variables

GO

Show Summary Details

Preview

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 sufficient empirical conditions under which data on the market behaviour of heterogeneous, price-taking consumers are non-parametrically consistent with the consumer characteristics model. Where these conditions hold, we show how information may be recovered on individual consumers' marginal valuations of product attributes. In some cases, marginal valuations are point identified, 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 rationalizing the data. We implement these ideas using consumer panel data on the Danish milk market.

Keywords: C20; D12

Journal Article.  8978 words.  Illustrated.

Subjects: Household Behaviour and Family Economics ; Single Equation Models; Single Variables

Full text: subscription required

How to subscribe Recommend to my Librarian

Users without a subscription are not able to see the full content. Please, subscribe or login to access all content.