A Demand System for Major Dairy Products in Ontario

Despite significant media and research interests drawn into the Canadian dairy sector in recent years, no study has estimated price and income elasticities of demand for major dairy products at the provincial level using longitudinal data. This article attempts to bridge this gap by estimating a demand system for seven major dairy products in Ontario. Employing Barten’s General Model, four alternative demand systems were nested and the NBR demand system was found to be the most appropriate for the data set in Ontario on both theoretical and empirical grounds. The symmetry, homogeneity and concavity conditions are all supported by the data. Empirically, all own-price elasticities are negative and statistically significant. The expenditure elasticities of all dairy products are positive, less than unity and statistically significant. Finally, most dairy products are net substitutes in consumption.

Issue Date:
Jun 11 2015
Publication Type:
Conference Paper/ Presentation
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 Record created 2017-04-01, last modified 2020-10-28

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