MODELING FOOD DEMUTILITY FUNCTION APPROACH

Information on consumer demand for food is important for agriculture-policy decisionmaking and various program analysis. In addition to conventional partial demand equation. there is an increasing attempt to estimate either an ordinary (quantity dependent) demand system or an inverse (price dependent) demand system so that the interdependent relationships of all commodity prices or quantities demanded can be considered in the demand analysis. To serve as a blueprint for use in food demand system research. this paper illustrates how to model a demand system that is consistent with classical demand theory. There are two approaches commonly used for specifying a demand system. The first approach is to approximate a demand system such as Theil's Rotterdam model (1965) and Huang's differential model (1988). The second approach is to derive a demand system either directly or indirectly from maximizing a consumer's utility function. Because of limited space requirements, I review only the demand systems that are generated from the latter approach.