Quality, Quantity, and Spatial Variation of Price

This paper develops and implements a method for estimating price elasticities of demand using cross-sectional household survey data. Geographically clustered households report unit values, which when corrected for quality effects and for measurement error, indicate the underlying spatial variation in prices, and can be matched to variation in demand patterns. A simple model of quality choice is proposed, while the correction for measurement error exploits the clustered design of such surveys. Data from a 1979 household survey from the Ivory Coast are used to estimate price elasticities for beef, meat, fish, cereals, and starches. Copyright 1988 by American Economic Association.