Demand for Organic Fluid Milk across Marketing Channels

Xianghong Li, Hikaru Hanawa Peterson, Tian Xia

Research output: Contribution to journalArticlepeer-review

Abstract

Organic food products, which have been sold traditionally at natural food stores, have become increasingly available through mass marketing channels. This study estimated an almost ideal demand system (AIDS) model using 2008-2010 retail scanner data to examine consumer demand for organic fluid milk products sold at conventional and natural marketing channels. Asymmetric cross-price elasticities were found suggesting relative stickiness in demand to switch from organic milk to conventional milk and from natural stores to food, drug, and mass merchandiser stores. More generally, demands shifting toward products with higher expenditure elasticities in a differentiated market can be explained by relative budget shares and expenditure elasticities.

Original languageEnglish (US)
Pages (from-to)505-532
Number of pages28
JournalAgricultural and Resource Economics Review
Volume47
Issue number3
DOIs
StatePublished - Dec 1 2018

Bibliographical note

Funding Information:
Li, Peterson, and Xia Demand for Organic Fluid Milk across Marketing Channels Li Xianghong Xianghong Li, Extension Associate, Department of Agricultural Economics, Kansas State University, Manhattan, Kansas, USA. Peterson Hikaru Hanawa Hikaru Hanawa Peterson, Professor, Department of Applied Economics, University of Minnesota, St. Paul, Minnesota, USA. Xia Tian Tian Xia, Associate Professor, Department of Agricultural Economics, Kansas State University, Manhattan, Kansas, USA. Correspondence: Hikaru Hanawa Peterson, Department of Applied Economics , University of Minnesota , St. Paul, Minnesota , USA , Email hhp@umn.edu Senior authorship is shared by Li, Peterson, and Xia. The authors are grateful for constructive comments from two anonymous reviewers. This material is based upon work supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture, under award number 2007-04505. The views expressed are the authors’ and do not necessarily represent the policies or views of any sponsoring agencies. 12 2018 47 3 505 532 Copyright © The Author(s) 2018 This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted re-use, distribution, and reproduction in any medium, provided the original work is properly cited. 2018 The Author(s) This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted re-use, distribution, and reproduction in any medium, provided the original work is properly cited. Organic food products, which have been sold traditionally at natural food stores, have become increasingly available through mass marketing channels. This study estimated an almost ideal demand system (AIDS) model using 2008–2010 retail scanner data to examine consumer demand for organic fluid milk products sold at conventional and natural marketing channels. Asymmetric cross-price elasticities were found suggesting relative stickiness in demand to switch from organic milk to conventional milk and from natural stores to food, drug, and mass merchandiser stores. More generally, demands shifting toward products with higher expenditure elasticities in a differentiated market can be explained by relative budget shares and expenditure elasticities.

Publisher Copyright:
Copyright © The Author(s) 2018.

Keywords

  • AIDS model
  • food, drug, and mass merchandiser stores
  • marketing channel
  • natural food stores
  • organic fluid milk
  • scanner data

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