The Systems of Consumer Demand Analysis: A Review
Volume 1 - Issue 4
Irfan Ullah*, Abbas Ullah Jan, Atta Ullah Shah, Ghaffar Ali and Muhammad Fayaz
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- Department of Agricultural & Applied Economics, The University of Agriculture Peshawar, Pakistan
*Corresponding author:
Irfan Ullah, Department of Agricultural & Applied Economics, The University of Agriculture Peshawar
Received: March 01, 2018;; Published: March 21, 2018
DOI: 10.32474/CIACR.2018.01.000118
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Abstract
For several decades both theoretical and empirical economist have shown interest in consumers behavior and regarding
consumer’s preferences has increased our understanding enormously. This paper is based on the comparative assessment of the
demand system selected; the Linear Expenditure System fails to describe consumers demand behavior as specified by Engel’s-Law.
With the increasing expenditures, inferior commodities lean towards luxuries which are not plausible. So, for food demand analysis
the LES is not appropriate. With utility maximizing behavior the Rotterdam is not consistent even if corresponds-to-generallyaccepted-
empirical-facts-and-is flexible (e.g. the substitutive or complementary relationship among goods and demand description
for inferior commodities, necessities and luxuries). The parametric restrictions given by AIDS and Indirect Trans log System,
theoretical properties of demand function can be imposed. Both systems depict generally empirical facts and are derived from
flexible function from. However, estimation process may become difficult due to relatively high number of independent parameters
the Indirect Tans log System. Linear Approximate Almost Ideal Demand System are much simpler in estimation and linear in
parameters and therefore, LA/AIDS can be widely applied as basic model for empirical studies.
Abstract|
Introduction|
Partial Versus Complete Demand System|
Conclusion|
References|