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Changing Dairy Consumption in an Emerging Economy: An Application of a Multivariate Two-part Model

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  • Fu, Shengfei
  • Florkowski, Wojciech J.

Abstract

This article examines the choices of Polish households in their decision to consume and the amount spent on four dairy products, i.e., whole milk, skim milk, butter and yogurt. A random utility framework leads to the specification of a system of four participation and four level (expenditure) equations. With the strong substitution effect between the consumption of whole milk and low-fat milk and possible correlation among the purchase decisions of other dairy products, the specification allows for correlation between the consumption decisions among different dairy products. Therefore, the selection of a system approach leads to constructing a multivariate two-part model. A pooled cross-sectional sample used in model estimation has 77,043 observations with non-missing values for the period from 2005 to 2008.

Suggested Citation

  • Fu, Shengfei & Florkowski, Wojciech J., 2016. "Changing Dairy Consumption in an Emerging Economy: An Application of a Multivariate Two-part Model," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235625, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea16:235625
    DOI: 10.22004/ag.econ.235625
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    References listed on IDEAS

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    1. Davis, Christopher G. & Dong, Diansheng & Blayney, Donald P. & Owens, Ashley, 2010. "An Analysis of U.S. Household Dairy Demand," Technical Bulletins 184308, United States Department of Agriculture, Economic Research Service.
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    3. Klepacka, Anna M. & Sobczyński, Tadeusz & Florkowski, Wojciech J. & Revoredo-Giha, Cesar, 2013. "Effects of the Common Agricultural Policy on Non-Family Farm Employment in Primary and Secondary Agricultural Areas," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150716, Agricultural and Applied Economics Association.
    4. Mullahy, John, 2011. "Marginal Effects in Multivariate Probit and Kindred Discrete and Count Outcome Models," Working Papers 201135, Geary Institute, University College Dublin.
    5. Sobczynski, Tadeusz & Klepacka, Anna M. & Revoredo-Giha, Cesar & Florkowski, Wojciech Jan, 2014. "Dairy farm cost efficiency in leading milk producing regions in Poland," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182647, European Association of Agricultural Economists.
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