DEMAND FOR MEAT AND FISH PRODUCTS IN KOREA

reject the separability between meat and fish products. The empirical model specified for this
study, therefore, includes both meat and fish products.

Almost Ideal Demand System (AIDS) and Rotterdam Model

Two different demand systems (AIDS and Rotterdam model) are considered to estimate
meat and fish product demand in Korea. Assuming that meat and fish products are not separable,
the Rotterdam model developed by Theil and Barten is specified for the Korean meat and fish
industry as follows:

n

(1)             wξ.∆ logq_i = ∑ Yij^δ l^ogPj + ^βiDQ^,            i = 1,2,...,n^,

j=1

where i and j are indexes for goods, q_i is the quantity demanded of the i^th good, and p_j is the
price of j^th good within the group. w_i is the average of w_{i t} and w_{i t-1}, budget shares of i^th good
on time t and t-1. ∆ denotes the first-difference operator ( ∆ logq_i=logq_i,t-logq_i,t-1 ). DQ
represents the real income term.

The theoretical restrictions of adding-up, homogeneity, and symmetry are satisfied by the
following parametric restrictions on the Rotterdam model.

nn

(2)            Adding-up:           ∑γ_ij = 0,     ∑β_i = 1.

i=1                          i=1

n

Homogeneity:        ∑γ_ij = 0.

j=1

Symmetry:            γ_ij = γ_ji .

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