With an ever-growing economy, China has poised as an important and potentially huge market for many exporters of food products in the world. China's access into the World Trade Organization (WTO) is further accelerating its integration into the world market, with its slow-nurturing agricultural sector not left behind. The future of food production, consumption, and supply in the rural sectors and the related welfare issues for farmers and consumers in China, and in other parts of the world alike, have been heatedly debated.
This study sets out to gain a credible knowledge of food consumption behavior in rural China, by estimating a consistent complete food demand system from recent rural household survey (RHS) data provided by China's National Bureau of Statistics (NBS), under the framework of agricultural household models. First, we develop a micro-theoretical framework for a typical Chinese rural household as a producer as well as consumer facing markets with failures. Secondly, utility maximizing behavior and comparative statics are analyzed to derive guidelines for empirical demand analyses as well as detailed methodology. Finally, the RHS data for Jiangsu, Heilongjiang, and Henan provinces in 1995 and 2001 are used to estimate the proposed quadratic almost ideal demand system (QAIDS).
We find the use of effective prices takes into account the dual role of a rural household as a producer and a consumer and helps reduce the problem of positive own price elasticities in demand estimation. We also find that transaction costs play important roles in deciding consumption patterns. For a rural household facing lower transaction costs, its consumptions on food products are found to be much more responsive to exogenous price and income changes. Using a simplified approach of demand analysis under our conceptual framework, we find from QAIDS estimation that food products consumed at home, and clothing and bedding are necessities, while food away from home, durable goods, and housing and utilities are luxuries. We also find the income elasticities of grain and vegetables decreased from 1995 to 2001 and those for meat and aquatic products increased at the same time, which agrees with the experience of developing countries.
|School:||The Ohio State University|
|Department:||Agricultural, Environmental and Development Economics|
|School Location:||United States -- Ohio|
|Source:||DAI-A 79/10(E), Dissertation Abstracts International|
|Keywords:||Agricultural household models, Consumption analysis, Demand analysis|
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