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Abstract

Bottled water has become the second largest in the nonalcoholic beverage market just behind the market for soft drinks. Knowledge of price sensitivity, substitutes or complements, and demographic profiling and tax issues with respect to consumption of sparkling and non-sparkling bottled water is important for manufacturers, retailers, advertisers, and other stakeholders from a competitive intelligence and strategic decision-making perspective. Using nationally representative household level data from 62,092 households (Nielsen Homescan), and tobit econometric procedure, factors affecting the demand for sparkling and non-sparkling bottled water will be determined. Moreover, own-price, cross-price, and income elasticities for sparkling and non-sparkling bottled water will be estimated. Finally, we evaluate the effect of a 10% tax on bottled water as they affect for non-sparkling bottled water and sparkling bottled water consumption.

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