Organic Labeling, Private Label, and U.S. Household Demand for Fluid Milk

29 Pages Posted: 17 Apr 2017 Last revised: 19 Dec 2017

See all articles by Bo Chen

Bo Chen

University of Kentucky - Department of Agricultural Economics, Students

Sayed H. Saghaian

University of Kentucky

Yuqing Zheng

University of Kentucky - College of Agriculture - Department of Agricultural Economics

Date Written: November 26, 2016

Abstract

The U.S. fluid milk market has been experiencing two trends in the recent decade: the fast growth of private label milk and organic milk. Using the latest Nielsen Consumer Panel Dataset, we estimate a censored demand system to study the demand relations among types of milk differentiated by brand types and organic status. We find that sociodemographic factors still play important roles in household choice of milk types, and fluid milk, as a whole, is an inferior good. Moreover, as income increases, households are more likely to shift from buying conventional milk to organic milk and from private label conventional milk to branded conventional milk, as indicated by the asymmetric cross price elasticities. Corresponding implications for milk producers and marketers are discussed.

Keywords: private label, organic, milk, censored demand system, elasticities

JEL Classification: Q11, D12

Suggested Citation

Chen, Bo and Saghaian, Sayed H. and Zheng, Yuqing, Organic Labeling, Private Label, and U.S. Household Demand for Fluid Milk (November 26, 2016). Available at SSRN: https://ssrn.com/abstract=2876119 or http://dx.doi.org/10.2139/ssrn.2876119

Bo Chen (Contact Author)

University of Kentucky - Department of Agricultural Economics, Students ( email )

Lexington, KY
United States

Sayed H. Saghaian

University of Kentucky ( email )

Lexington, KY 40546
United States

Yuqing Zheng

University of Kentucky - College of Agriculture - Department of Agricultural Economics ( email )

Lexington, KY 40546
United States

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