Testing of Weak Separability and Estimating of Meat Demand System in Iran (Application of Rotterdam Demand System)

Document Type : Research Paper

Authors

1 PhD Student of Agricultural Economics, Payame Noor University, Tehran, Iran

2 Associate Professor of Agricultural Economics, Payame Noor University, Tehran, Iran

3 Professor of Agricultural Economics, Faculty of Agricultural Economics and Development, University of Tehran, Karaj, Iran

4 Assistant Professor of Agricultural Economics, Institute of Planning Research, Agricultural Economics and Rural Development, Tehran, Iran

Abstract

The separability of consumer desires is a necessary and sufficient condition for multi-stage budgeting and collectivization is consistent of commodity where costs are allocated between edible groups by price indices and intergroup allocations are made independently other groups. Given the high share of meat types (23 percent of household food and beverage expenditure) in the household budget and the important nutritional role of meat in people's health  to  determine the consumption pattern of meat products in Iran used to Rotterdam demand function in this study. In empirical studies of demand, the concept of separation is employed to correctly estimate demand function and limit the number of parameters. For this purpose, data of price index and cost of meat types (livestock, birds, fish) central Bank over the years 1995-2016 were used. The results of the separability tests support the hypothesis that a consumer first divide their income between 13 meat products in three groups (livestock, birds, fish) assigns and then approves the allocation action between the types of meat subgroups that are grouped. Also, the results  of system estimation showed that the groups had a negative intrinsic price elasticity.In the meantime, the price elasticity of groups livestock meat, birds and  fish meat are respectively equal to -0.89, -0.59 and  -0.77. This study suggest doing weak separability tests before each action on the demand system approach. 

Keywords

References

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Iranian Journal of Agricultural Economics and Development Research
Volume 52, Issue 2
May 2021
Pages 215-228

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