Disequilibrium Estimation of the Demand for Copper

In this paper, we estimate the demand for refined copper in the United States, taking account of the fact that, during much of the sample period, copper supplies were rationed. The estimating technique, which is closely related to the Tobit model, is much simpler than techniques previously used to disequilibrium estimation. Our empirical results are consistent with institutional evidence of the existence of rationing. They suggest that OLS estimates of the demand for copper, which implicitly assume that the market is always in equilibrium, are severely biased.