Suits’ Watermelon Model: The Missing Simultaneous Equations Empirical Application

Abstract

Instructors of econometrics courses sometimes seek an empirical simultaneous equations application that, ideally, (i) goes beyond the two-equation case most often used in textbook examples, (ii) is based on available real-world data that can be used in hands-on exercises, (iii) replicates prominent published results, (iv) can be motivated as being of some historical importance, (v) uses accessible economic theory, and (vi) yields plausible empirical results understandable to students. The seminal but now-forgotten 1955 watermelon study of Daniel Suits is suggested as an empirical application that meets all these criteria.