Application of the Quadratic Almost Ideal Demand System (QUAIDS) Model in the Demand of the Household Animal Sourced Food in West Java

Bayu Kharisma (), Armida Alisjahbana, Sutyastie Soemitro Remi and Putri Praditya

AGRIS on-line Papers in Economics and Informatics, 2020, vol. 12, issue 01

Abstract: This paper aims to determine the effect of demographic and socio-economic factors and household responses to household changes in prices and income against the demand for household animal-sourced food in West Java Province. The study used cross-section data sourced from the National Socio-Economic Survey (SUSENAS) of West Java Province in 2017 analyzed through the Quadratic Almost Ideal Demand System (QUAIDS). The results showed that the demand for household animal-sourced food in West Java was influenced by price, income, and social demographic factors. All groups of animal-sourced food were categorized as normal goods, as characterized by an income elasticity value of more than zero. The income elasticity established meat commodities as the highest with eggs being the lowest. The nature of the commodity determined that all animal-sourced food groups except eggs are luxury goods. Luxury goods are categorized as such due to their above one value of the demand response against changes in income- which in this paper refers to the commodities of fish, meat, poultry, and milk. The own-price elasticity also showed meat as the most responsive commodity to price increases compared to fish, poultry milk, and eggs. The five groups of commodities achieved a negative elasticity value, as reflected by the reduced share when the decreasing demand responds to the commodity price increase. The cross-price elasticity of most animal-sourced food commodity groups achieved negative elasticity values, which indicated that the related animal-sourced food commodity groups were complementary, whereas positive elasticity values indicate the related food commodities group as a substitute.

Keywords: Agribusiness; Agricultural Finance; Research and Development/Tech Change/Emerging Technologies (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aolpei:303932

DOI: 10.22004/ag.econ.303932

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