Household demand for fats and oils: two-step estimation of a censored demand system

Abstract

A censored system of household fat and oil demand equations is estimated with a two-step procedure, using cross-sectional data from the 1987-1988 US Nationwide Food Consumption Survey. Own price and total expenditure elasticities are close to unity and there is no evidence of gross substitutability. Compensated elasticities suggest net substitution among the products considered.