35 Marine Resource Economics, Volume 26, pp. 35–58 0738-1360/00 $3.00 + .00 Printed in the U.S.A. All rights reserved. Copyright © 2011 MRE Foundation, Inc. Madan Mohan Dey is a professor, Department of Aquaculture/Fisheries, University of Arkansas at Pine Bluff, 1200 N. University Drive, Mail Slot 4912, Pine Bluff, AR 71601 USA (email: mdey@uaex.edu; m.dey@cgiar. org). Md. Ferdous Alam is a research fellow, Institute of Agricultural and Food Policy Studies, Universiti Putra Malaysia, Putra Infoport, Jalan Kajang-Puchong, 43400 UPM Serdang Selangor, Malaysia (email: dr.ferdous@ gmail.com). Ferdinand J. Paraguas is a Ph.D. candidate, Department of Spatial Economics, Faculty of Econom- ics and Business Administration, VU University Amsterdam, De Boelelaan 1105, Room 4A-13, 1081 HV Am- sterdam, the Netherlands (email: fparaguas@feweb.vu.nl). A Multistage Budgeting Approach to the Analysis of Demand for Fish: An Application to Inland Areas of Bangladesh MADAN MOHAN DEY University of Arkansas at Pine Bluff MD. FERDOUS ALAM Universiti Putra Malaysia FERDINAND J. PARAGUAS VU University Amsterdam Abstract This study was conducted to estimate the elasticities of demand for eight different fish types and four income groups in Bangladesh using year-round data col- lected from inland areas of the country. It uses a three-stage budgeting framework that estimates a demand function for food in the first stage, a demand function for fish (as a group) in the second stage, and a set of demand functions for fish by type in the third stage using a quadratic extension of the Almost Ideal Demand System (QUAIDS) model. The Heckman procedure was used in stage three to remove the possible bias in the parameter estimates brought about by zero consumption. The magnitude of both price and income elasticities varies across different fish types and income quartile groups, indicating the relevance of estimation specific to fish types and quartiles. Except for assorted small fish, the other seven fish types included in the study were found to have positive income elasticity for all income levels. Assorted small fish is an inferior commodity for the richest quartile of the population. Key words Bangladesh, fish demand elasticities, Inverse Mills Ratio, multi-stage budgeting, quadratic extension to Almost Ideal Demand System (QUAIDS). JEL Classification Codes C3, Q21. Introduction The aquaculture and fisheries sector plays an important role in developing countries, providing nutrition, income, employment, and foreign exchange (Smith et al. 2010). As in many other Asian countries, food fish plays a major role in human nutrition in Bangla- desh by supplying about 66% of total animal protein intake, which constitutes about 14% of a person’s total protein intake (Bangladesh Bureau of Statistics 2007). Fisheries and aquaculture development is also considered as an important vehicle for reducing poverty and improving food security in the country (Government of Bangladesh 2004; Karim et al. 2006). The Government of Bangladesh is committed to developing appropriate strate-