Journal of Rural Development
Estimates of Price and Expenditure Elasticities of Demand for Imported Orange and Domestically Produced Fruits in Korea
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AuthorNoh, Sujeong
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Publication Date2012.10.19
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Original
The Rotterdam demand model, first proposed by Theil and Barten, is used to find estimates of price and expenditure elasticities of imported fruits and domestically produced fruits in Korea. This model consists of 6 demand equations of apple, pear, tangerine, sweet persimmon, orange and banana. The major implications with the estimates of individual price and expenditure elasticities are summarized as follows. The demand for orange is expected to increase by 38.1% if seasonal duties would be abolished in 2018 in accordance with the Korea-U.S. free trade agreement. Also the demand for Korean pear would decrease by 19.9% as a consequence of the substitution effect. We also found that price elasticity of imported orange with respect to the demand for Korean tangerine is not statistically significant. This implies that Korean tangerine is mostly sold from Oct. to Feb. while imported orange is mostly sold from Mar. into the summer months every year.
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