Demand for Nutrients: The Household Production Approach

This study uses the household production theory to study the demand for nutrients, i.e., households purchase a combination of food items from the market and produce the needed nutrients from these food items. By following the traditional household production approach, shadow prices for nutrients in food consumption are calculated. The cost function that generates the shadow prices appears plausible in terms of its elasticities of substitution and factor demand. After obtaining the calculated shadow prices of nutrients, the nutrient demand functions are estimated. Results show that the own-price elasticity of demand for nutrient is inelastic, whereas the expenditure elasticities indicate that nutrients are normal goods. Crossprice elasticities show that there appears to be complementarity in the demand for nutrients. This seems a logical result.