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Demand for Domestic and Imported Table Wine in British Columbia: A Source‐differentiated Almost Ideal Demand System Approach
Author(s) -
Carew R.,
Florkowski W. J.,
He S.
Publication year - 2004
Publication title -
canadian journal of agricultural economics/revue canadienne d'agroeconomie
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.505
H-Index - 37
eISSN - 1744-7976
pISSN - 0008-3976
DOI - 10.1111/j.1744-7976.2004.tb00101.x
Subject(s) - wine , almost ideal demand system , economics , white wine , quality (philosophy) , agricultural economics , product (mathematics) , production (economics) , food science , microeconomics , mathematics , philosophy , chemistry , geometry , epistemology
The premium quality wine market in British Columbia has grown substantively over the past decade. However, few empirical studies exist to quantify how consumers have responded to these wines. This paper employs a source‐differentiated almost ideal demand system (AIDS) model with time‐varying parameters to estimate the demand for premium quality wines using scanner sales data from the British Columbia wine market. The empirical findings reveal that consumers' response to foreign‐produced wines differs from that for wine produced locally. It is evident that the expenditure elasticities for British Columbia, European and Rest‐of‐the‐World white wines are larger than those for red wines. The high expenditure elasticities associated with British Columbia white wines may suggest that these wines are associated with higher quality. We reject the hypotheses of block separability and product aggregation. There is no evidence of structural change from the tests employed in this paper.