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Household-Level Welfare Effects of Organic Milk Introduction

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  • Hee-Jung Choi
  • Michael K. Wohlgenant
  • Xiaoyong Zheng

Abstract

Using household scanner data and a discrete choice modeling approach, we estimate demand for milk products at the micro-level and compute the distribution of welfare effects from introducing organic milk across households with different characteristics within the partial equilibrium framework. The price effects of introducing organic milk are larger for low-income households than for high-income households, and the differences in the variety effects of introducing organic milk to groups with various levels of education are larger than the differences in the variety effects among groups with different income levels. Policy implications of these findings are discussed. Copyright 2013, Oxford University Press.

Suggested Citation

  • Hee-Jung Choi & Michael K. Wohlgenant & Xiaoyong Zheng, 2013. "Household-Level Welfare Effects of Organic Milk Introduction," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(4), pages 1009-1028.
    • Handle: RePEc:oup:ajagec:v:95:y:2013:i:4:p:1009-1028
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    1. Steven Berry & James Levinsohn & Ariel Pakes, 2004. "Differentiated Products Demand Systems from a Combination of Micro and Macro Data: The New Car Market," Journal of Political Economy, University of Chicago Press, vol. 112(1), pages 68-105, February.
    2. Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-890, July.
    3. Steven T. Berry, 1994. "Estimating Discrete-Choice Models of Product Differentiation," RAND Journal of Economics, The RAND Corporation, vol. 25(2), pages 242-262, Summer.
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    1. Robert Clark & Yiran Gong, 2021. "Why Do Some New Products Fail? Evidence from the Entry and Exit of Vanilla Coke," Working Paper 1475, Economics Department, Queen's University.
    2. Ghazaryan, Armen & Bonanno, Alessandro & Carlson, Andrea, 2023. "I Say Milk, You Say Mylk. Demand Separability in a Broadened Milk Category," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 48(2), May.
    3. Syed Badruddoza & Andrea C. Carlson & Jill J. McCluskey, 2022. "Long‐term dynamics of US organic milk, eggs, and yogurt premiums," Agribusiness, John Wiley & Sons, Ltd., vol. 38(1), pages 45-72, January.
    4. Osman Gulseven & Michael Wohlgenant, 2015. "A quality-based approach to estimating quantitative elasticities for differentiated products: an application to retail milk demand," Quality & Quantity: International Journal of Methodology, Springer, vol. 49(5), pages 2077-2096, September.
    5. Lee, Sangwon, 2022. "Economic effects of plant-based milk introduction on consumers and dairy industry," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322573, Agricultural and Applied Economics Association.
    6. Phani Kumar Chintakayala & William Young & Ralf Barkemeyer & Michelle A. Morris, 2018. "Breaking niche sustainable products into the mainstream: Organic milk and free‐range eggs," Business Strategy and the Environment, Wiley Blackwell, vol. 27(7), pages 1039-1051, November.

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