IDEAS home Printed from https://ideas.repec.org/a/pje/journl/article27sumii.html
   My bibliography  Save this article

HEDONIC PRICING OF MILK AT RETAIL LEVEL: A Case of Faisalabad, Pakistan

Author

Listed:
  • Waseem AHMAD*
  • Tanvir AHMED**
  • Bashir AHMAD***

Abstract

The study investigates as to how different attributes influence the retail price using milk as a case study. The analysis of this study is based on the ‘revealed preference theory’ using ‘hedonic price analysis’. For this purpose the data was collected by use of a questionnaire and by obtaining milk samples from the household consumers of Faisalabad city of Pakistan. Linear functional form was used to estimate influence of milk components and sensory variables as perceived by consumers on the price of milk. Findings of the study indicate that various attributes (i.e., fat, solid-not-fat, total plate count, aroma, color, etc.,) has significant impact on the price of milk. The results suggest that the government should take appropriate measures to improve the quality of milk through check-points and installation of milk testing laboratories. Provision of cooling tanks/chilling units should be installed at producer-centres/associations; and refrigerated transportation would also help to improve the quality of milk and prevent milk spoilage.

Suggested Citation

  • Waseem AHMAD* & Tanvir AHMED** & Bashir AHMAD***, 2017. "HEDONIC PRICING OF MILK AT RETAIL LEVEL: A Case of Faisalabad, Pakistan," Pakistan Journal of Applied Economics, Applied Economics Research Centre, vol. 27(1), pages 29-39.
    • Handle: RePEc:pje:journl:article27sumii
    as

    Download full text from publisher

    File URL: http://www.aerc.edu.pk/wp-content/uploads/2017/06/Paper-633-II-WASIM-1.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Richard K. Perrin, 1980. "The Impact of Component Pricing of Soybeans and Milk," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 62(3), pages 445-455.
    2. Kenneth E. McConnell & Ivar E. Strand, 2000. "Hedonic Prices for Fish: Tuna Prices in Hawaii," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(1), pages 133-144.
    3. George W. Ladd & Marvin B. Martin, 1976. "Prices and Demands for Input Characteristics," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 58(1), pages 21-30.
    4. Waseem Ahmad & Sven Anders, 2012. "The Value of Brand and Convenience Attributes in Highly Processed Food Products," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 60(1), pages 113-133, March.
    5. Deiter, Ronald E. & Hillers, J. K. & Freeman, A. E. & Dommerhold, J., 1980. "Value of Fat and Protein in Producer Milk," Staff General Research Papers Archive 11078, Iowa State University, Department of Economics.
    6. Martin Petrick & Laure Latruffe, 2006. "Contractual Relations in Agricultural Credit Markets: A Hedonic Pricing Approach with Application to Poland," Journal of Agricultural Economics, Wiley Blackwell, vol. 57(1), pages 49-63, March.
    7. Dadi Kristofersson & Kyrre Rickertsen, 2007. "Hedonic Price Models for Dynamic Markets," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 69(3), pages 387-412, June.
    8. Francisco Requena‐Silvente & James Walker, 2006. "Calculating Hedonic Price Indices with Unobserved Product Attributes: An Application to the UK Car Market," Economica, London School of Economics and Political Science, vol. 73(291), pages 509-532, August.
    9. Margaretha Rudstrom, 2004. "Determining Implicit Prices for Hay Quality and Bale Characteristics," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 26(4), pages 552-562.
    10. George W. Ladd & Veraphol Suvannunt, 1976. "A Model of Consumer Goods Characteristics," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 58(3), pages 504-510.
    11. Margaretha Rudstrom, 2004. "Determining Implicit Prices for Hay Quality and Bale Characteristics," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 26(4), pages 552-562.
    12. Robert E. Jacobson & Francis E. Walker, 1973. "Efficiency Considerations in Butterfat Differential and Component Pricing of Milk," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 55(2), pages 214-216.
    13. William J. Gillmeister & Robert D. Yonkers & James W. Dunn, 1996. "Hedonic Pricing of Milk Components at the Farm Level," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 18(2), pages 181-192.
    14. Combris, Pierre & Lecocq, Sebastien & Visser, Michael, 1997. "Estimation for a Hedonic Price Equation for Bordeaux Wine: Does Quality Matter?," Economic Journal, Royal Economic Society, vol. 107(441), pages 390-402, March.
    15. Blair J. Smith & Stephen D. Snyder, 1978. "Effects of Protein and Fat Pricing on Farm Milk Prices for the Five Major U.S. Dairy Breeds," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 60(1), pages 126-131.
    16. Timothy J. Richards & Scott R. Jeffrey, 1996. "Establishing Indices of Genetic Merit Using Hedonic Pricing: An Application to Dairy Bulls in Alberta," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 44(3), pages 251-264, November.
    17. Hugh L. Cook, 1954. "The Place of Fat and Solids-Not-Fat in Pricing Milk for Manufacturing," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 36(5), pages 1107-1117.
    18. John E. Lenz & Ron C. Mittelhammer & Hongqi Shi, 1994. "Retail-Level Hedonics and the Valuation of Milk Components," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(3), pages 492-503.
    19. Cropper, Maureen L & Deck, Leland B & McConnell, Kenneth E, 1988. "On the Choice of Functional Form for Hedonic Price Functions," The Review of Economics and Statistics, MIT Press, vol. 70(4), pages 668-675, November.
    20. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    21. Normand R. St-Pierre & Grant M. Scobie, 1987. "The Component Pricing of Milk Revisited," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 69(3), pages 693-696.
    22. Bowman Kenneth R. & Don E. Ethridge, 1992. "Characteristic Supplies and Demands in a Hedonic Framework: U.S. Market for Cotton Fiber Attributes," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(4), pages 991-1002.
    23. Whitley, John E., 2002. "The political economy of quality measurement: a case study of the USA slaughter cattle market," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 46(4), pages 1-24.
    24. Abid A. Burki & Mushtaq A. Khan & Faisal Bari, 2005. "The State of Pakistan’s Dairy Sector : An Assessment," Microeconomics Working Papers 22247, East Asian Bureau of Economic Research.
    25. Jack J. Kirkland & Ron C. Mittelhammer, 1986. "A Nonlinear Programming Analysis of Production Response to Multiple Component Milk Pricing," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(1), pages 44-54.
    26. Douglas D. Parker & David Zilberman, 1993. "Hedonic Estimation of Quality Factors Affecting the Farm-Retail Margin," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(2), pages 458-466.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Smed, Sinne & Hansen, Lars Garn, 2018. "Consumer Valuation of Health Attributes in Food," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 43(2), May.
    2. N. Koffi Amegbeto & Victor M. Manyong & Ousmane Coulibaly & Robert Asiedu, 2008. "Estimating market demand for fresh yam characteristics using contingent valuation: implications for crop breeding and production choices," Agricultural Economics, International Association of Agricultural Economists, vol. 39(3), pages 349-363, November.
    3. Nolan, Elizabeth & Farrell, Terence & Ryan, Madeleine & Gibbon, Candice & Ahmadi-Esfahani, Fredoun Z., 2014. "Valuing quality attributes of Australian merino wool," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 58(3), July.
    4. DESBOIS, Dominique, 2015. "La qualité du lait a-t-elle un prix ? Une estimation hédonique de la valeur des attributs spécifiques du lait de vache," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement (RAEStud), Institut National de la Recherche Agronomique (INRA), vol. 96(3), September.
    5. Richards, Timothy J. & Jeffrey, Scott R., 1995. "Hedonic Pricing of Dairy Bulls - An Alternative Index of Genetic Merit," Project Report Series 24035, University of Alberta, Department of Resource Economics and Environmental Sociology.
    6. Curtis, Kynda R. & Cowee, Margaret W. & Kim, Man-Keun & Harris, Thomas R., 2010. "Evaluating Returns to Cool Season Grass Quality Characteristics for Niche Equine Feed Markets," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 28(1).
    7. Kolodinsky, Jane, 2008. "Affect or information? Labeling policy and consumer valuation of rBST free and organic characteristics of milk," Food Policy, Elsevier, vol. 33(6), pages 616-623, December.
    8. Dadi Kristofersson & Kyrre Rickertsen, 2004. "Efficient Estimation of Hedonic Inverse Input Demand Systems," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(4), pages 1127-1137.
    9. Ahmad, Waseem & Ahmed, Tanvir & Ahmad, Bashir, 2019. "Pricing of mobile phone attributes at the retail level in a developing country: Hedonic analysis," Telecommunications Policy, Elsevier, vol. 43(4), pages 299-309.
    10. Suleyman Karaman & Bahattin Cetin & Ayse Oguzlar & Koksal Yagdi, 2009. "Hedonic price estimation for the Turkish bread wheat characteristics," Quality & Quantity: International Journal of Methodology, Springer, vol. 43(6), pages 895-902, November.
    11. Edmeades, Svetlana, 2005. "A Hedonic Perspective to Estimating a Marginal Value Function for a Subsistence Crop," 2005 Annual meeting, July 24-27, Providence, RI 19500, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    12. Ranney, Christine K. & McNamara, Paul E., 2002. "Do Healthier Diets Cost More?," 2002 Annual meeting, July 28-31, Long Beach, CA 19588, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    13. Hossain, Afjal & Badiuzzaman,, 2021. "Hedonic prices for the fruit market in Bangladesh: Lessons from guava and hog plum purchase decisions," Journal of Retailing and Consumer Services, Elsevier, vol. 62(C).
    14. Shi, Hongqi & Price, David W., 1998. "Impacts Of Sociodemographic Variables On The Implicit Values Of Breakfast Cereal Characteristics," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 23(1), pages 1-14, July.
    15. Martínez-Garmendia, Josué, 2010. "Application of hedonic price modeling to consumer packaged goods using store scanner data," Journal of Business Research, Elsevier, vol. 63(7), pages 690-696, July.
    16. Espinosa, Juan Andres & Goodwin, Barry K., 1991. "Hedonic Price Estimation For Kansas Wheat Characteristics," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 16(1), pages 1-14, July.
    17. Landon, Stuart & Smith, Constance, 1997. "The Use of Quality and Reputation Indicators by Consumers: The Case of Bordeaux Wine," MPRA Paper 9283, University Library of Munich, Germany.
    18. Ekanem, Enefiok P. & Sundquist, W. Burt, 1993. "Estimating Marginal Implicit Prices For Selected Quality Attributes Of Hybrid Seed Corn," Staff Papers 13473, University of Minnesota, Department of Applied Economics.
    19. Laurent Gobillon & François-Charles Wolff & Patrice Guillotreau, 2017. "The effect of buyers and sellers on fish market prices," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 44(1), pages 149-176.
    20. Laurent Gobillon & François-Charles Wolff & Patrice Guillotreau, 2013. "The anatomy of prices on the French fish market," Working Papers halshs-00839147, HAL.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pje:journl:article27sumii. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Samina Khalil (email available below). General contact details of provider: https://edirc.repec.org/data/aekarpk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.