A general two-constraint model of consumer demand
Carlos E. Carpio, Michael K. Wohlgenant
Abstract
Carlos E. Carpio, Michael K. Wohlgenant
Abstract
We generalise a two-constraint model of consumer demand so as to make utility a function of both consumption of the good and the time allocated to consumption, to accommodate the fact that the consumer may derive utility from the time spent acquiring and/or consuming the good. We use the comparative static results to specify demand systems consistent with this theory and develop an econometric approach to estimate the demand parameters. The model is used to obtain empirical demand functions for customers visiting pick-your-own fruit farms, where customers choose between harvesting fruit themselves and buying pre-harvested fruit on the farm.
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We generalise a two-constraint model of consumer demand so as to make utility a function of both consumption of the good and the time allocated to consumption, to accommodate the fact that the consumer may derive utility from the time spent acquiring and/or consuming the good. We use the comparative static results to specify demand systems consistent with this theory and develop an econometric approach to estimate the demand parameters. The model is used to obtain empirical demand functions for customers visiting pick-your-own fruit farms, where customers choose between harvesting fruit themselves and buying pre-harvested fruit on the farm.
Key concepts: Constraint (computer-aided design), Consumer demand, Consumption (sociology), Demand curve, Economics, Function (biology), Consumer choice, Microeconomics