Habit Formation in Natural Cheese Consumption An Approach Based on Dynamic Demand Analysis

In expectation of growing cheese consumption, natural cheese production is being increased to reduce surplus milk and create high added value in raw milk. Other studies found positive trends in cheese consumption. However, those studies neither clarified recent trends, nor distinguished natural cheese from processed cheese. The purpose of this paper is to discuss the structure of natural cheese consumption, focusing on habit formation. We test structural changes in cheese demand using dynamic panel analysis based on family income and expenditure survey data (by City with Prefectural Government), and then estimate habit formation in natural cheese demand after structural change using a dynamic LA/AIDS model based on aggregated POS data. The findings are summarized as follows. First, a gradual structural change is found in cheese demand from 1988 to 1999, and a habit formation effect in cheese demand gradually decreased. Second, based on analysis of natural cheese demand after structural change, a habit formation effect in high priced natural cheese (e.g., Camembert, Gouda) is greater than those of the other kinds of natural cheese and processed cheese. Third, high priced natural cheese is more price inelastic and expenditure elastic than the others. In the mature stage of cheese demand, such a natural cheese market is expected to grow and to be suitable for value added products.

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Journal Article
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Journal of Rural Economics, Volume 82, Number 1
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 Record created 2017-04-01, last modified 2018-01-22

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