The application and economic interpretation of selectivity models

Chung L. Huang, Robert Raunikar, Sukant Misra

Research output: Contribution to journalArticle

19 Scopus citations

Abstract

Substantial differences in economic interpretations may be inferred from the estimated selectivity model results. Using the demand for frozen concentrated orange juice (FCOJ) as an example, the study suggests that the consumption patterns are quite similar between national brand and private label when the marginal effects and elasticities are evaluated based on actual observations rather than unobserved latent variables. Results show that private label FCOJ is considered as a normal (inferior) good if the income effect is assessed based on actual (potential) purchases. The estimated cents-off elasticities for private label FCOJ also vary substantially depending on which approach is used.

Original languageEnglish
Pages (from-to)496-501
Number of pages6
JournalAmerican Journal of Agricultural Economics
Volume73
Issue number2
DOIs
StatePublished - May 1991

Keywords

  • Conditional expectation
  • Elasticity
  • Marginal effect
  • Orange juice
  • Selectivity bias
  • Switching regression
  • Unconditional expectation

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