Urban Demand for Edible Oils and Fats in China: Evidence from Household Survey Data

Using urban household-level survey data from 1992 to 1998, we provide estimates of final demand for edible vegetable oils and animal fats in three regions of China based on the LinQuad incomplete demand system. For each region, the demand for the major “staple” oil is price inelastic. The demand for “condiment” or flavoring oils is more price responsive. All edible oils and fats have positive income elasticity, but smaller than one. Using the LinQuad parameter estimates, we provide exact measures of urban consumer welfare losses associated with trade restrictions on vegetable oil imports. Consumers suffer a significant welfare loss of the order of $ 392 million (1998 dollars).