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Journal Article

Nonparametric estimation of a nonseparable demand function under the Slutsky inequality restriction

Authors

Publication date

May 2017

Summary

We present a method for consistent nonparametric estimation of a demand function with nonseparable unobserved taste heterogeneity subject to the shape restriction implied by the Slutsky inequality. We use the method to estimate gasoline demand in the United States. The results reveal differences in behavior between heavy and moderate gasoline users. They also reveal variation in the responsiveness of demand to plausible changes in prices across the income distribution. We extend our estimation method to permit endogeneity of prices. The empirical results illustrate the improvements in finite-sample performance of a nonparametric estimator from imposing shape restrictions based on economic theory.

Published in

Review of Economics and Statistics

Volume and page numbers

99 , 291 -304

DOI

https://doi.org/10.1162/REST_a_00636

Subjects

Statistical Mathematics and Economics

Links

University of Essex, Albert Sloman Library Periodicals *restricted to University of Essex registered users* - http://serlib0.essex.ac.uk/record=b1588265~S5

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