QUALITY VARIATION AND QUANTITY AGGREGATION IN CONSUMER DEMAND FOR FOOD

Viewing the problem of "quality" variation in consumer demand for food as a problem of valid aggregation over goods leads to new insights. The simple sum of physical quantities, used as the measure of demand in the "quality" literature, is found to be a theoretically arbitrary and potentially misleading measure of demand when goods are heterogenous. Alternative measures of demand derived from restrictions on quality variation, consumer preferences, or relative prices, are investigated. A hypothetical example illustrates the use of a Hicksian composite commodity assumption. The empirical as well as conceptual merits of the various measures are discussed.