Abstract
This paper analyzes a demand system for eight major fresh vegetables in the USA using the most recently available dataset (1970–2010). A first-differenced Linear Approximate Almost Ideal Demand System (LA-AIDS) is applied to estimate price and expenditure elasticity of demand, imposing homogeneity and symmetry restrictions. We find that not only are consumers responsive to changes in own-prices but they also respond significantly to changes in prices of other fresh vegetables that are consumed together. Conditional budget share allocation to lettuce, cabbage, and celery has declined, while the share of the consumer dollar going to tomatoes, peppers, and onions has increased over the period. Except for cabbage, all own-price elasticity estimates are negative, less than unity in absolute value, and statistically significant. About half of the 56 cross-price elasticities are negative and significant, indicating high, albeit asymmetric, complementarities among these fresh vegetables. Expenditure elasticities are positive and significant for all but one of these eight vegetables. Over the period under consideration, demand and expenditure elasticities remained fairly stable.
Highlights
The demand for fresh produce in the United States continues to increase yearly due, in large part, to consumer awareness about the linkages between diet and health
Rising incomes and the changing demographic makeup of the USA population has contributed to increased demand for fresh produce
According to the USA Census Bureau [3], Hispanics and Asians combined make up about 21% of the USA population, up from 16% in the year 2000
Summary
The demand for fresh produce in the United States continues to increase yearly due, in large part, to consumer awareness about the linkages between diet and health. Per capita consumption of fresh vegetables increased roughly 12% between 1989 and 1999, compared to 9.9% for all fresh fruits and vegetables [1]. Rising incomes and the changing demographic makeup of the USA population has contributed to increased demand for fresh produce. Studies have shown that consumption of fresh fruits and vegetables is positively correlated with incomes [2]. The demand for specialty and ethnic fresh fruits and vegetables is growing, spurred by increases in Hispanic and Asian populations, who tend to have more fresh-produce-based diets than the rest of the population. According to the USA Census Bureau [3], Hispanics and Asians combined make up about 21% of the USA population, up from 16% in the year 2000
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
