This chapter presents a discussion of some foundational issues in demand estimation. To do so, the authors estimate the demand function at each location, and then construct the spatial price index based on the available products at each location. From an econometric point of view, these models are interesting in that they involve nonlinearity and complete system estimation methods Demand analysis is a large subject and several books have been written in this area In this lecture we will only be able to touch on some of the issues. Delve into the mechanics of demand functions, exploring mathematical formulations, elasticity, and their role in economic theory and markets.
In general studies of demand for single goods or policy orientated studies are often more concerned with estimation of elasticities rather tan testing the theory. In this chapter i will review the main methodologies used in economics for demand estimation, focusing on recent trends such as the structural approach and machine learning techniques.
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