PARTIAL RATIONING AND CHINESE URBAN HOUSEHOLD FOOD DEMAND ANALYSIS

This paper uses a mixed-demand model to analyze consumer behavior unde r partial rationing in which a household can purchase limited amounts of necessities, such as staple foods, from the government distribution system at subsidized prices and buy additional quantities from the pr ivate market. Theoretically the mixed-demand model does not require th e suboptimal market disequilibrium assumption that strictly binding ra tioning models have to make. This model is also in conformity with the market clearance reality of a dual-price mixed economy. The different ial Rotterdam mixed-demand system is applied to China's urban househol d food demand data. The mixed-demand model performs better than demand systems that ignore the rationing issue and produces a set of elastic ities that the strict rationing model can not produce. J. Comp. Econom ., February 1996, 22(1), pp. 43-62. American Express, Phoenix, Arizona 85021; and University of Arkansas, Fayetteville, Arkansas 72701. (C) 1996 Academic Press, Inc.