Working Paper

Bounding quantile demand functions using revealed preference inequalities

Authors

Richard Blundell, Dennis Kristensen, Rosa Matzkin

Published Date

1 June 2011

Type

Working Paper (CWP21/11)

This paper develops a new technique for the estimation of consumer demand models with unobserved heterogeneity subject to revealed preference inequality restrictions. Particular attention is given to nonseparable heterogeneity. The inequality restrictions are used to identify bounds on quantile demand functions. A nonparametric estimator for these bounds is developed and asymptotic properties are derived. An empirical application using data from the U.K. Family Expenditure Survey illustrates the usefulness of the methods by deriving bounds and confidence sets for estimated quantile demand functions.


Latest version

Bounding quantile demand functions using revealed preference inequalities
Richard Blundell, Dennis Kristensen, Rosa Matzkin
CWP