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The Demand for Organic, Integrated-Agriculture, and Conventional Fresh Vegetables: A Censored Inverse Almost Ideal Demand System

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Author Info

  • Vasiliki Fourmouzi

    ()
    (Department of Economics, University of Crete)

  • Margarita Genius

    ()
    (Department of Economics, University of Crete, Greece)

  • Vangelis Tzouvelekas

    ()
    (Department of Economics, University of Crete, Greece)

Abstract

The Inverse Almost Ideal Demand System is employed for the empirical analysis of the demand for organic, integrated-agriculture, and conventional fresh vegetables, using a cross section data surveyed in Rethymno, Greece during the 2005-06 period. The demand system is estimated by employing the Amemiya-Tobin model by Wales and Woodland for the estimation of censored equation systems, which ensures that the adding-up restriction is satisfied for both the latent and the observed expenditure shares. The problem regarding the logarithm of quantities when zero purchases are reported, is resolved in a theoretically consistent way that allows full-sample estimation and yields unbiased parameter estimates. The empirical results suggest that integrated-agriculture fresh vegetables are luxury goods, whereas the cross-quantity uncompensated flexibilities indicate that consumers are not regular buyers of any of the three types of fresh vegetables. Both groups of consumers who currently buy integrated-agriculture vegetables and those who buy conventional vegetables can be easily induced to buy organic vegetables.

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Bibliographic Info

Paper provided by University of Crete, Department of Economics in its series Working Papers with number 0618.

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Length: 26 pages
Date of creation: 01 Oct 2006
Date of revision:
Handle: RePEc:crt:wpaper:0618

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  1. Robert H. Beach & Matthew T. Holt, 2001. "Incorporating Quadratic Scale Curves in Inverse Demand Systems," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(1), pages 230-245.
  2. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-26, June.
  3. Cornes,Richard, 1992. "Duality and Modern Economics," Cambridge Books, Cambridge University Press, number 9780521336017, October.
  4. Boland, Michael A. & Schroeder, Ted C., 2002. "Marginal Value Of Quality Attributes For Natural And Organic Beef," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 34(01), April.
  5. George E. Battese, 1997. "A Note On The Estimation Of Cobb-Douglas Production Functions When Some Explanatory Variables Have Zero Values," Journal of Agricultural Economics, Wiley Blackwell, vol. 48(1-3), pages 250-252.
  6. Michael Burton & Dan Rigby & Trevor Young, 1999. "Analysis of the Determinants of Adoption of Organic Horticultural Techniques in the UK," Journal of Agricultural Economics, Wiley Blackwell, vol. 50(1), pages 47-63.
  7. George E. Battese & Sohail J. Malik & Manzoor A. Gill, 1996. "An Investigation Of Technical Inefficiencies Of Production Of Wheat Farmers In Four Districts Of Pakistan," Journal of Agricultural Economics, Wiley Blackwell, vol. 47(1-4), pages 37-49.
  8. Amemiya, Takeshi, 1974. "Multivariate Regression and Simultaneous Equation Models when the Dependent Variables Are Truncated Normal," Econometrica, Econometric Society, vol. 42(6), pages 999-1012, November.
  9. Brown, Mark G & Lee, Jonq-Ying & Seale, James L, Jr, 1995. "A Family of Inverse Demand Systems and Choice of Functional Form," Empirical Economics, Springer, vol. 20(3), pages 519-30.
  10. Barten, A. P. & Bettendorf, L. J., 1989. "Price formation of fish : An application of an inverse demand system," European Economic Review, Elsevier, vol. 33(8), pages 1509-1525, October.
  11. repec:jaa:jagape:v:34:y:2002:i:1:p:39-49 is not listed on IDEAS
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