Incomplete Demand Systems, Corner Solutions, and Welfare Measurement

  title={Incomplete Demand Systems, Corner Solutions, and Welfare Measurement},
  author={Roger H. von Haefen},
  journal={Agricultural and Resource Economics Review},
  • Roger H. von Haefen
  • Published 2010
  • Economics
  • Agricultural and Resource Economics Review
  • This paper demonstrates how corner solutions raise difficulties for the specification, estimation, and use of incomplete demand systems for welfare measurement with disaggregate consumption data, as is common in the outdoor recreation literature. A simple analytical model of consumer behavior is used to elucidate the potential biases for welfare measurement arising from modeling the demand for M goods as a function of M + N prices (N > 1) and income when individuals do not consume all goods in… CONTINUE READING
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