Examination of Factor affecting Change in Demand for Meat Using Almost Ideal Demand System Model
2017
Kim, W.T., Korea Rural Economic Institute, Naju, Republic of Korea
This paper examines the demand system of the red meat for domestic meat and imported meat by classifying country of origin. For this purpose, LA/ AIDS model is performed by using the actual consumption data. Furthermore, test of the endogeneity of price variables in the red meat demand system is conducted and the factors affecting the meat demand is analyzed by using the elasticity estimated from the LA/AIDS model. The empirical findings suggest that first, test results that there is no evidence of endogeneity of the price variables in the red meat demand system allow us to estimate SUR model. Second, the sign of all price elasticity is negative implying the normal good, and the price elasticity of korean pork is estimated to be equal to -0.66, but the price elasticity of substitute meat is not statistically significant. Third, estimate of 1.48 of the expenditure elasticity for korean beef is larger than that of the korean pork (0.80). Finally, the key factor affecting an increase in the meat demand is found to be an increase in per capita consumption by rising income.
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