Endogeneity and Fruit Vegetable Demand in the Philippines

In this paper, QUAIDS analysis was carried out to examine the demand system of vegetables in the Philippines, with casting light on the endogenous issues for a more rigorous discussion. As a result of comparing the model controlling for the endogeneity and the model without controlling for the endogeneity, the percent difference between elasticities of two models was shown up to 187%. This result suggests that price and expenditure endogeneities have a significant influence on estimates in the demand system, and the result implies that this may lead to inconsistent estimates when demand analysis does not control for endogeneity.