Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Trade
and
Markets
Division
OUTLINE
Introduction
Definition and Methodology Empirical results
Introduction
At its last session, the IGG on tea recommended a review of demand elasticities to gain some insights into factors affecting consumption and update the world tea model. This presentation presents the major findings of this effort and discusses follow up actions needed to improve the results in light of the limited data availability. This analysis should be considered as a work in progress.
In an earlier analysis of the United States tea market the Secretariat found that both income and prices had relatively small impact on consumption, but demographic factors did. The study also revealed that health had a greater influence on tea consumption.
= +
+ (
= )
and where, in observation t; wit is the budget (expenditure) share of the ith good; pjt is the nominal price of the jth good; lnXt is total expenditure; uit is the random or error term; and lnPt is the translog price index substituted by the stone index.
Most of the estimated parameters of the LA/AIDS model were significant, suggesting a significant influence of prices on budget share. Also the sign of price and expenditure variables were consistent with the theory, and their magnitudes were within the expected range.
Trade and Markets Division
Expenditure elasticity ni
Black Tea -0.818*** (0.0228) 1.230 (1.6419) -2.989*** (0.2783) 0.860*** (0.0217)
Green Tea -0.992** (0.4935) -0.985*** (0.0106) -0.043 (0.2251) -0.304 (1.7305)
Trade
and
Markets
Division
Hicksian elasticities:
Key results.. UK
Coffee and black tea were found to be substitutes.
Expenditure elasticity ni
Trade
and
Markets
Division
Hicksian elasticities:
Trade
and
Markets
Division
Hicksian elasticities:
Trade
and
Markets
Division
-0.76 0.054
Markets
Division
More analysis is required utilizing comprehensive information of all competing beverages in order to establish the nature and magnitude of the changes in consumer choices, if any. If such analysis should continue, the Group is requested to provide the information required to undertake the analysis.
Trade and Markets Division
16
Thank You
Trade
and
Markets
Division