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Ornamental Plants in the United States: An Econometric Analysis of a Household‐Level Demand System

Vardges Hovhannisyan and Hayk Khachatryan

Agribusiness, 2017, vol. 33, issue 2, 226-241

Abstract: ABSTRACT This study provides an empirical analysis of demand for a large group of ornamental plants using a theory‐based demand model. Specifically, consumer preferences are represented by the Almost Ideal Demand System where allowance is made for demand censoring. Given that revealed‐preference data are usually limited to certain ornamental plants and geographical locations, we exploit unique hypothetical purchase data collected via an online survey regarding 16 annual, perennial, and foliage plants from across the United States. The effect of various socio‐economic and demographic factors on demand for plants is quantified. Our findings indicate that ornamental plants are predominantly price‐elastic with foliage plants being more price‐responsive vis‐a‐vis other plant categories. Further, a majority of plants are expenditure‐elastic with the estimates of foliage plants manifesting the greatest variability. Finally, plants in the same category appear to be closer substitutes. Results benefit ornamental plant industry stakeholders as they determine the best pricing strategies in their specific markets.

Date: 2017
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Handle: RePEc:wly:agribz:v:33:y:2017:i:2:p:226-241