Demand characterization for green and colored bell pepper: Does color affect the substitution possibilities between local and imported bell pepper?

A Linear Approximation of the Inverse AIDS model is used to characterize the demand for green and colored bell pepper sourced locally, and imported from Mexico and other countries. This study seeks to answer the questions: Are green and colored bell pepper substitute or complementary goods? If they are substitutes, how big is the degree of substitution? Does that degree of substitution changes as the source changes (i.e. Mexico vs the U.S.). Results indicate that green and colored fresh bell pepper are substitutes. And that the degree of substitution between sources depends on whether the bell pepper is green or colored. The U.S.’s green bell pepper has greater substitutability than the U.S.’s colored bell pepper. Also, the demand for green bell pepper is more inflexible/elastic than the colored bell pepper. An interesting finding is that, according to the scale flexibility, the U.S.’s colored bell pepper is perceived by costumers as a luxury, while Mexico’s colored bell pepper is perceived as a necessity. And the opposite for green bell pepper.

Issue Date:
Jan 17 2018
Publication Type:
Conference Paper/ Presentation
Record Identifier:
Total Pages:
JEL Codes:
Q11, Q17, Q18

 Record created 2018-01-18, last modified 2018-01-22

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