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The Demand For Bananas And The Economic Effect Of Supply Restriction

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  • Chadwick, J. B.
  • Nieuwoudt, W. L.

Abstract

The wholesale demand elasticity of bananas was estimated at between -0,52 and -0,66 for the short run and between -0,65 and -0,71 for the long run. Estimates of demand elasticities using Time Varying Parameters varied between -0,62 and -0,93, also indicating that the demand becomes less price elastic during summer months. Retail elasticities were estimated at between -1,42 and -1,52 for the short run and at -1,79 for the long run. The social cost of the banana control programme is estimated at between 7,8 % and 12,68 % of income transfer between producers and consumers in marketing areas. The impact of cut-backs in banana production where entry is free (any farmer can produce bananas) is to increase prices in marketing areas, but depress prices in production areas. It is uncertain whether farm income can be increased significantly through such a scheme even though the demand is inelastic, if the supply of good banana land is not limited.

Suggested Citation

  • Chadwick, J. B. & Nieuwoudt, W. L., 1985. "The Demand For Bananas And The Economic Effect Of Supply Restriction," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 24(2), October.
    • Handle: RePEc:ags:agreko:267083
    DOI: 10.22004/ag.econ.267083
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    References listed on IDEAS

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    3. Nieuwoudt, W. L., 1977. "Seasonal Variations In Price, Production And Total Income Of Selected Horticultural Products," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 16(3), July.
    4. van der Meulen, John, 1958. "The Demand for Bananas in the Sydney Wholesale Market," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 26(03), pages 1-10, September.
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    6. Aggrey-Mensah, W. & Guise, John W.B., 1969. "Seasonality in the Demand for Bananas," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 37(04), pages 1-18, December.
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