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In empirical demand, industrial organization, and labor economics, prices are often unobserved or unobservable since they may only be recorded when an agent transacts. In the absence of any additional information, this partial observability of prices is known to lead to a number of identification problems. However, in this paper, we show that theory-consistent demand analysis remains feasible in the presence of partially observed prices, and hence partially observed implied budget sets, even if we are agnostic about the nature of the missing prices. Our revealed preference approach is empirically meaningful and easy to implement. We illustrate using simple examples.
Authors
Ian Crawford
Research Associate University of Leicester
Professor of Economics at the University of Leicester. His research interests are in applied microeconomics and microeconomic theory.
Working Paper details
- DOI
- 10.1920/wp.ifs.2015.1516
- Publisher
- Institute for Fiscal Studies
Suggested citation
Crawford, I and Polisson, M. (2015). Demand analysis with partially observed prices. London: Institute for Fiscal Studies. Available at: https://ifs.org.uk/publications/demand-analysis-partially-observed-prices (accessed: 4 May 2024).
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