The Systems of Consumer Demand Analysis: A Review by Irfan Ullah* in Current Investigations in Agriculture and Current Research (CIACR) in Lupine Publishers
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-generally- accepted-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.
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