Quality versus quantity in Mexican household poultry and pork purchases

How food demand responds to changes in income, prices and household characteristics is important from a policy perspective when attempting to improve the dietary status of a particular population. This study develops a unique double-hurdle model of demand for a composite food, which endogenizes the commodities unit value. The model structure allows us to account for the inability to observe such values for non-purchasing households while simultaneously adjusting for quality-based demand effects for purchasing households. Our application to Mexican household pork and poultry expenditures shows the importance of controlling for composite good quality. We find that for these two aggregate commodities, expenditures depend on both quantity demanded and quality desired. JEL Classification: C51, D12 © 2000 John Wiley & Sons, Inc.