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Demand for Organic Fluid Milk across Marketing Channels

Xianghong Li, Hikaru Hanawa Peterson and Tian Xia

Agricultural and Resource Economics Review, 2018, vol. 47, issue 3, 505-532

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.

Date: 2018
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