DERIVED DEMAND ELASTICITIES: MARKETING MARGIN METHODS VERSUS AN INVERSE DEMAND MODEL FOR CHOICE BEEF

Three methods of calculating the derived elasticity of demand for Choice slaughter beef are used: (a) a traditional marketing margin approach, (b) a modified marketing margin approach, and (c) an econometric, inverse demand model approach. The first method is more restrictive than the second but both tend to overestimate beef price flexibility and revenue changes. The econometric model, though an incomplete demand system, yields demand elasticities that are more consistent with marketing flexibility but are less pronounced than estimates of a complete system. An example using a two-year revenue forecast compares slaughter revenue adjustments based on the first margin method with those based on structural demand models.


Issue Date:
1991-12
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/32607
Published in:
Western Journal of Agricultural Economics, Volume 16, Number 2
Page range:
382-391
Total Pages:
10




 Record created 2017-04-01, last modified 2017-08-25

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