The market system demand curve : a fundamental distortion

Bibliographic Details
Main Author: Mendes, Ricardo António Dias Costa Carvalho
Publication Date: 2018
Format: Master thesis
Language: eng
Source: Repositórios Científicos de Acesso Aberto de Portugal (RCAAP)
Download full: http://hdl.handle.net/10362/38858
Summary: Dissertation presented as the partial requirement for obtaining a Master's degree in Statistics and Information Management, specialization in Information Analysis and Management
id RCAP_ed61fae0286a61f255800ef01de4825b
oai_identifier_str oai:run.unl.pt:10362/38858
network_acronym_str RCAP
network_name_str Repositórios Científicos de Acesso Aberto de Portugal (RCAAP)
repository_id_str https://opendoar.ac.uk/repository/7160
spelling The market system demand curve : a fundamental distortionMarket demand distortionEcological economicsMarket based mechanismFlorida preferenceDissertation presented as the partial requirement for obtaining a Master's degree in Statistics and Information Management, specialization in Information Analysis and ManagementSince the mid-1970s, the global economy has been dominated by the spread of capitalist market economies, growing inequality and increasing ecological degradation. The latter may be the most serious of these trends. Human economic activities have reached a level that is bound to instigate irreversible change to the global environment, creating conditions likely to be less conducive to human development. The market system demand curve is distorted if inequality is sufficiently great and the purchasing power has a greater impact on allocation than preferences. If we attempt to internalize the ecological costs of essential resources into their market prices, driving up price, the best case scenario is that the poor reduce consumption by more than the rich, even though the rich have been the primary drivers of ecological degradation. The thesis focuses on the food allocation and demand curve distortion. Mainstream economists argue that it is impossible to objectively compare marginal utility across individuals, and the best we can do is equate willingness to pay with utility. However, food consumption is a physiological need, and it is quite possible to objectively compare the marginal utility it provides to different individuals. Certainly, a malnourished person gains more from additional food than an overfed one. A comprehensive econometric modeling of an aggregated and two-staged food demand systems is carried out for one hundred-seventy-seven countries. The data is retrieved from the 2011 round of the World Bank International Comparison Program. In the first stage, the Florida preference independence model is applied to the main broad groups of goods and services. In the second stage, a conditional demand system for food subcategories is estimated using the Florida Slutsky model. An Inaccuracy measure and the Stroble decomposition are used in the outliers detection procedure The system equations are corrected for both groupwise and scale heteroskedasticity. The iterated nonlinear seemingly unrelated regression (ITNLSUR) is applied in the final estimation, while the iterated nonlinear least squares (ITNLLS) produces the initial values. The gauss-newton method is used to approximate the maximums of the objective functions. Expenditures elasticities, Slutsky own price elasticities, Frisch own price elasticities and Cournot own price elasticities constitute the estimate of the elasticities structure. Expenditure and marginal expenditure shares are the most valued direct outcome of the models. In a perfect allocation system food marginal shares would be equal for every country. The discrepancies shown are an indicator of the market distortion. A redistribution towards poorer countries would increase total utility. Even if a pareto optimum is in place in every economy (normally it is not), the solution captured by the model seems to be far from a global optimum. It is of upmost importance to know what are the implications on the real income of the poor if ecological thresholds are put in place through a market based mechanism. The Cournot elasticity estimates make evident that the poorer countries have more elastic demand curves, resulting primarily from the impact of increasing prices on real income, since there are no substitutes for food. This means that in an unequal market economy, if market based instruments are used to reduce the ecological degradation caused by food production, the poor will reduce consumption by a much greater percentage than the rich in response to price increases. Since the rich are responsible for far more ecological degradation than the poor, this outcome is highly perverse. This distortion is associated with the food shares and the marginal food shares that are higher in less affluent countries.Costa, Ana Cristina Marinho daFarley, JoshuaRUNMendes, Ricardo António Dias Costa Carvalho2018-06-08T13:11:56Z2018-05-282018-05-28T00:00:00Zinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/masterThesisapplication/pdfhttp://hdl.handle.net/10362/38858TID:201926016enginfo:eu-repo/semantics/openAccessreponame:Repositórios Científicos de Acesso Aberto de Portugal (RCAAP)instname:FCCN, serviços digitais da FCT – Fundação para a Ciência e a Tecnologiainstacron:RCAAP2024-05-22T17:33:22Zoai:run.unl.pt:10362/38858Portal AgregadorONGhttps://www.rcaap.pt/oai/openaireinfo@rcaap.ptopendoar:https://opendoar.ac.uk/repository/71602025-05-28T17:04:27.690537Repositórios Científicos de Acesso Aberto de Portugal (RCAAP) - FCCN, serviços digitais da FCT – Fundação para a Ciência e a Tecnologiafalse
dc.title.none.fl_str_mv The market system demand curve : a fundamental distortion
title The market system demand curve : a fundamental distortion
spellingShingle The market system demand curve : a fundamental distortion
Mendes, Ricardo António Dias Costa Carvalho
Market demand distortion
Ecological economics
Market based mechanism
Florida preference
title_short The market system demand curve : a fundamental distortion
title_full The market system demand curve : a fundamental distortion
title_fullStr The market system demand curve : a fundamental distortion
title_full_unstemmed The market system demand curve : a fundamental distortion
title_sort The market system demand curve : a fundamental distortion
author Mendes, Ricardo António Dias Costa Carvalho
author_facet Mendes, Ricardo António Dias Costa Carvalho
author_role author
dc.contributor.none.fl_str_mv Costa, Ana Cristina Marinho da
Farley, Joshua
RUN
dc.contributor.author.fl_str_mv Mendes, Ricardo António Dias Costa Carvalho
dc.subject.por.fl_str_mv Market demand distortion
Ecological economics
Market based mechanism
Florida preference
topic Market demand distortion
Ecological economics
Market based mechanism
Florida preference
description Dissertation presented as the partial requirement for obtaining a Master's degree in Statistics and Information Management, specialization in Information Analysis and Management
publishDate 2018
dc.date.none.fl_str_mv 2018-06-08T13:11:56Z
2018-05-28
2018-05-28T00:00:00Z
dc.type.status.fl_str_mv info:eu-repo/semantics/publishedVersion
dc.type.driver.fl_str_mv info:eu-repo/semantics/masterThesis
format masterThesis
status_str publishedVersion
dc.identifier.uri.fl_str_mv http://hdl.handle.net/10362/38858
TID:201926016
url http://hdl.handle.net/10362/38858
identifier_str_mv TID:201926016
dc.language.iso.fl_str_mv eng
language eng
dc.rights.driver.fl_str_mv info:eu-repo/semantics/openAccess
eu_rights_str_mv openAccess
dc.format.none.fl_str_mv application/pdf
dc.source.none.fl_str_mv reponame:Repositórios Científicos de Acesso Aberto de Portugal (RCAAP)
instname:FCCN, serviços digitais da FCT – Fundação para a Ciência e a Tecnologia
instacron:RCAAP
instname_str FCCN, serviços digitais da FCT – Fundação para a Ciência e a Tecnologia
instacron_str RCAAP
institution RCAAP
reponame_str Repositórios Científicos de Acesso Aberto de Portugal (RCAAP)
collection Repositórios Científicos de Acesso Aberto de Portugal (RCAAP)
repository.name.fl_str_mv Repositórios Científicos de Acesso Aberto de Portugal (RCAAP) - FCCN, serviços digitais da FCT – Fundação para a Ciência e a Tecnologia
repository.mail.fl_str_mv info@rcaap.pt
_version_ 1833596413748969472

Similar Items