Market development and food demand in rural China

The authors hypothesize that rural demand for foodstuffs in China amy be restricted in part by incomplete development of markets, in particular markets for meat. They model this relationship, and test it on 1993 Statistical Bureau data (supplemented by field surveys) for rural households in six counties of hebei Province. They find a multidimensional impact for their market development variable on food consumption behaviour. The results imply that if households purchased 100% of their foodstuffs on markets, rather than the current 38%, income elasticity for grain would fall from .85 to .51, and for meat would rise from .35 to .85. If market development rises with rising income, these results suggest that previous estimates of China's income elasticity for purchased foodstuffs are biased. JEL Classification Numbers: D1, D4, and P23.