Epsilon Archive for Student Projects

Abstract

This paper examines the influence of prices and income on organic fruits. Fresh fruit consumption is impacted by high price volatility, and these price changes influence especially organic goods. Own-price, cross-price, and expenditure elasticities are examined with a QAIDS based on a dataset of a Swedish supermarket. The analysis shows that organic goods are always more price and expenditure sensitive than their conventional counterpart. The results suggest that consumers compare the relative prices of organic and conventional goods and that declining prices could increase the market share for some organic fruits. On the other hand, organic demand seems to be limited by the lack of advantages for consumers, even for organic products with a small price. Furthermore, expenditure elasticities suggest that a higher fruit budget leads to higher consumption of organic goods. Overall, organic goods seem to be purchased by a small group of organic consumers that are willing to pay a price premium. Demand could be pushed by non-monetary measures like highlighting positive impacts of organic production.