Does Organic Crowding Out Influence Organic Food Demand? – evidence from a Danish micro panel

Lars Gårn Hansen () and Laura Andersen ()
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Lars Gårn Hansen: Department of Food and Resource Economics, University of Copenhagen

No 2013/2, IFRO Working Paper from University of Copenhagen, Department of Food and Resource Economics

Abstract: All previous studies of organic food demand that investigating substitution focus on specific food submarkets and have to assume separability from other food consumption. However, consumers typically associate attributes such as e.g. healthiness and environment friendliness with organic variants of most types of food. If such general organic attributes are important for consumer behaviour then separability may not hold because the general attribute obtained from one type of organic food may be a close or even perfect substitute for the same attribute obtained from other types of organic food. In this paper we utilize a unique Danish micro panel where all food demand is registered on a disaggregated level with an organic/non-organic indicator to estimate a general food demand system with organic variants. We clearly reject the usual separability assumption and find that the behaviour of Danish consumers is consistent with them perceiving such general organic attributes. In addition estimation of a general demand system makes calculation of economy wide organic price elasticities and other insights into the structure of organic food demand possible.

Keywords: Organic consumption; crowding out; separability; AIDS model; home scan data (search for similar items in EconPapers)
JEL-codes: D12 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2013-01
New Economics Papers: this item is included in nep-agr and nep-mkt
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Citations: View citations in EconPapers (1)

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