Specification Tests for Mixed Demand Systems with an Emphasis on Combining Contingent Valuation and Revealed Data

In a world characterized by r unrationed goods (i.e., market goods) and (n − r) rationed goods, such as most environmental goods, necessary and sufficient conditions for the existence of an underlying rational preference structure are derived based on a system of mixed demand functions with complete information. With incomplete information, the case of a partial demand system is addressed, and a test for separability is proposed. The implications for testing rationality in a world characterized by combined (RP and SP) individual data are examined for data consistency. Testable conditions are derived.