Files
Abstract
We investigate how to theoretically and empirically measure pre-committed quantities through
price formation utilizing translating in the consumer distance function. The translated consumer
distance function is defined as a dual to the translated utility, indirect utility, and expenditure
functions. Translating procedures also provide more general analytical means to incorporate pre-
committed quantities (and other shift or demographic variables) into inverse demand systems.
This approach yields a class of inverse demand functions that can nest most known functional
forms. For example, the Inverse Generalized Almost Ideal Demand (IGAI) model can be formed
by applying translating procedures to the Inverse Almost Ideal Demand model. An empirical
example of the IGAI model with inferences on the translating parameters themselves is provided
for illustrative purposes.