Preference Variable Impacts in Direct and Inverse Differential Demand Systems

Preference variables are included in the inverse Rotterdam model based on the Tintner-Ichimura-Basmann relationship linking preference effects on quantities demanded to price effects and preference effects on marginal utilities. Restrictions are placed on the effects of the preference variables on the marginal utilities, resulting in reductions in the parameter space for the preference variables in both direct and inverse demand systems. The model is used to analyze impacts of product quality on fresh citrus demand. Copyright 2010, Oxford University Press.