DEMAND FOR MEAT AND FISH PRODUCTS IN KOREA

(¹²)           w.∖ logq_i = ∑ Yij^δ logPj + ^βiDQ *

j=1

= ∑ Yi, ∆ log Pj + βi [∆ log X - ∑ W ∙ A log Pj ].

j =1j =1

On the right-hand side, the real income terms in the first-differentiated LA/AIDS in

Equation (10) differs from the Rotterdam model. The differences is the use of W_j instead of w_j
in the Rotterdam model in Equation (12).

Equation (10) and (12) can be combined as

n

⁽¹³⁾            (1^{- φ})Δw.log(q_i) + (^φ∖^wi = ∑Yij^δ log(p,) + ^βiDQ*^,         i = 1,2,...,n .

j=1

Equation (13) is a linear combination of the LA/AIDS and the Rotterdam model. If φ = 0,
Equation (13) reduces to the Rotterdam model; if φ = 1 , Equation (13) reduces to the first-
differentiated LA/AIDS. A test of the hypothesis that φ = 0 can be interpreted as a test of the
hypothesis that the Rotterdam model is the correct specification.

The LA/AIDS can be tested directly as well. In the alternative compound model,

n

(14)           (1 — λ )∆Wi + λ∆Wi log(qi ) = ∑ Yij∆ log(p, ) + β.∆ log(X / P *)

j=1

λ = 0 implies that the LA/AIDS is correct while λ near 1 is evidence against the LA/AIDS in
the direction of the Rotterdam model.

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