IDEAS home Printed from https://ideas.repec.org/p/foi/wpaper/2013_2.html
   My bibliography  Save this paper

Does Organic Crowding Out Influence Organic Food Demand? – evidence from a Danish micro panel

Author

Listed:
  • Lars Gårn Hansen

    (Department of Food and Resource Economics, University of Copenhagen)

  • Laura Mørch Andersen

    (Department of Food and Resource Economics, University of Copenhagen)

Abstract

All previous studies of organic food demand that investigating substitution focus on specific food submarkets and have to assume separability from other food consumption. However, consumers typically associate attributes such as e.g. healthiness and environment friendliness with organic variants of most types of food. If such general organic attributes are important for consumer behaviour then separability may not hold because the general attribute obtained from one type of organic food may be a close or even perfect substitute for the same attribute obtained from other types of organic food. In this paper we utilize a unique Danish micro panel where all food demand is registered on a disaggregated level with an organic/non-organic indicator to estimate a general food demand system with organic variants. We clearly reject the usual separability assumption and find that the behaviour of Danish consumers is consistent with them perceiving such general organic attributes. In addition estimation of a general demand system makes calculation of economy wide organic price elasticities and other insights into the structure of organic food demand possible.

Suggested Citation

  • Lars Gårn Hansen & Laura Mørch Andersen, 2013. "Does Organic Crowding Out Influence Organic Food Demand? – evidence from a Danish micro panel," IFRO Working Paper 2013/2, University of Copenhagen, Department of Food and Resource Economics.
    • Handle: RePEc:foi:wpaper:2013_2
    as

    Download full text from publisher

    File URL: http://okonomi.foi.dk/workingpapers/WPpdf/WP2013/IFRO_WP_2013_2.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Giancarlo Moschini & Daniele Moro & Richard D. Green, 1994. "Maintaining and Testing Separability in Demand Systems," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(1), pages 61-73.
    2. Laura Mørch Andersen, 2011. "Animal Welfare and Eggs – Cheap Talk or Money on the Counter?," Journal of Agricultural Economics, Wiley Blackwell, vol. 62(3), pages 565-584, September.
    3. Huang, Chung L, 1996. "Consumer Preferences and Attitudes towards Organically Grown Produce," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 23(3), pages 331-342.
    4. Jolly, Desmond A., 1991. "Differences Between Buyers and Nonbuyers of Organic Produce and Willingness to Pay Organic Price Premiums," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 9(1), pages 1-15.
    5. Glaser, Lewrene K. & Thompson, Gary D., 1999. "Demand For Organic And Conventional Frozen Vegetables," 1999 Annual meeting, August 8-11, Nashville, TN 21583, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Boland, Michael & Schroeder, Ted, 2002. "Marginal Value of Quality Attributes for Natural and Organic Beef," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 34(1), pages 39-49, April.
    7. Thompson, Gary D. & Glaser, Lewrene K., 2001. "National Demand For Organic And Conventional Baby Food," 2001 Annual Meeting, July 8-11, 2001, Logan, Utah 36139, Western Agricultural Economics Association.
    8. Pedro A. Alviola & Oral Capps, 2010. "Household demand analysis of organic and conventional fluid milk in the United States based on the 2004 Nielsen Homescan panel," Agribusiness, John Wiley & Sons, Ltd., vol. 26(3), pages 369-388.
    9. Dhar, Tirtha & Foltz, Jeremy D., 2004. "Milk by Any Other Name... Consumer Benefits from Labeled Milk," Working Papers 201547, University of Wisconsin-Madison, Department of Agricultural and Applied Economics, Food System Research Group.
    10. Wesley Nimon & John Beghin, 1999. "Are Eco-Labels Valuable? Evidence From the Apparel Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(4), pages 801-811.
    11. Gary D. Thompson, 1998. "Consumer Demand for Organic Foods: What We Know and What We Need to Know," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(5), pages 1113-1118.
    12. Buzby, Jean C. & Skees, Jerry R., 1994. "Consumers Want Reduced Exposure to Pesticides on Food," Food Review/ National Food Review, United States Department of Agriculture, Economic Research Service, vol. 17(2), May.
    13. Katrin Millock & Mette Wier & Laura Andersen, 2005. "Information Provision, Consumer Perceptions and Values – the Case of Organic Foods," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00272034, HAL.
    14. Loureiro, Maria L. & Hine, Susan E., 2002. "Discovering Niche Markets: A Comparison Of Consumer Willingness To Pay For Local (Colorado Grown), Organic, And Gmo-Free Products," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 34(3), pages 1-11, December.
    15. Wier, Mette & O'Doherty Jensen, Katherine & Andersen, Laura Mørch & Millock, Katrin, 2008. "The character of demand in mature organic food markets: Great Britain and Denmark compared," Food Policy, Elsevier, vol. 33(5), pages 406-421, October.
    16. Bjorner, Thomas Bue & Hansen, L.G.Lars Garn & Russell, Clifford S., 2004. "Environmental labeling and consumers' choice--an empirical analysis of the effect of the Nordic Swan," Journal of Environmental Economics and Management, Elsevier, vol. 47(3), pages 411-434, May.
    17. Browning, Martin & Meghir, Costas, 1991. "The Effects of Male and Female Labor Supply on Commodity Demands," Econometrica, Econometric Society, vol. 59(4), pages 925-951, July.
    18. Patrick J. Byrne & J. Richard Bacon & Ulrich C. Toensmeyer, 1994. "Pesticide residue concerns and shopping location likelihood," Agribusiness, John Wiley & Sons, Ltd., vol. 10(6), pages 491-501.
    19. W. M. Gorman, 1980. "A Possible Procedure for Analysing Quality Differentials in the Egg Market," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 47(5), pages 843-856.
    20. Mette Wier & Katherine O'Doherty Jensen & Laura Morch Andersen & Katrin Millock, 2008. "The Character of Demand in Mature Organic Food Markets: Great Britain and Denmark Compared," Post-Print halshs-00343683, HAL.
    21. Lee, Lung-Fei & Pitt, Mark M, 1986. "Microeconometric Demand Systems with Binding Nonnegativity Constraints: The Dual Approach," Econometrica, Econometric Society, vol. 54(5), pages 1237-1242, September.
    22. Mittal,Surabhi & Mukherjee,Arpita (ed.), 2008. "Food for Policy," Cambridge Books, Cambridge University Press, number 9788175966215, January.
    23. Lee, Lung-Fei & Pitt, Mark M., 1987. "Microeconometric models of rationing, imperfect markets, and non-negativity constraints," Journal of Econometrics, Elsevier, vol. 36(1-2), pages 89-110.
    24. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-326, June.
    25. Denny, Michael & Fuss, Melvyn A, 1977. "The Use of Approximation Analysis to Test for Separability and the Existence of Consistent Aggregates," American Economic Review, American Economic Association, vol. 67(3), pages 404-418, June.
    26. Tirtha Dhar & Jeremy D. Foltz, 2005. "Milk by Any Other Name … Consumer Benefits from Labeled Milk," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(1), pages 214-228.
    27. Glaser, Lewrene K. & Thompson, Gary D., 2000. "Demand For Organic And Conventional Beverage Milk," 2000 Annual Meeting, June 29-July 1, 2000, Vancouver, British Columbia 36346, Western Agricultural Economics Association.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Frank Bunte & Michiel Galen & W. Kuiper & Gemma Tacken, 2010. "Limits to Growth in Organic Sales," De Economist, Springer, vol. 158(4), pages 387-410, November.

    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. Schrock, Rebecca, 2010. "Determinants Of The Demand For Organic And Conventional Fresh Milk In Germany– An Econometric Analysis," 115th Joint EAAE/AAEA Seminar, September 15-17, 2010, Freising-Weihenstephan, Germany 116387, European Association of Agricultural Economists.
    2. Wier, Mette & O'Doherty Jensen, Katherine & Andersen, Laura Mørch & Millock, Katrin, 2008. "The character of demand in mature organic food markets: Great Britain and Denmark compared," Food Policy, Elsevier, vol. 33(5), pages 406-421, October.
    3. Schroeck, Rebecca, 2011. "Wie sensibel reagieren deutsche Verbraucher auf Preisänderungen bei Bio-Eiern? Eine Nachfrageanalyse mit Haushaltspanel-Daten," 51st Annual Conference, Halle, Germany, September 28-30, 2011 114492, German Association of Agricultural Economists (GEWISOLA).
    4. Lindström, Hanna, 2021. "The Swedish consumer market for organic and conventional milk: A demand system analysis," Umeå Economic Studies 998, Umeå University, Department of Economics.
    5. Katrin, Millock & Hansen, Lars Gårn, 2002. "Willingness to Pay for Organic Foods: A Comparison between Survey Data and Panel Data from Denmark," MPRA Paper 47588, University Library of Munich, Germany.
    6. Vasiliki Fourmouzi & Margarita Genius & Peter Midmore, 2012. "The Demand for Organic and Conventional Produce in London, UK: A System Approach," Journal of Agricultural Economics, Wiley Blackwell, vol. 63(3), pages 677-693, September.
    7. Lindström, Hanna, 2021. "The Swedish consumer market for organic and conventional milk: A demand system analysis," HFI Working Papers 21, Institute of Retail Economics (Handelns Forskningsinstitut).
    8. Kleemann, Linda, 2014. "Knowing where organic markets move next: An analysis of developing countries in the pineapple market," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 8, pages 1-34.
    9. Anders, Sven M. & Moeser, Anke, 2008. "Using Retail Scanner Data to Assess the Demand for Value-based Ground Meat Products in Canada," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44154, European Association of Agricultural Economists.
    10. Schroeck, Rebecca, 2011. "A Demand System Analysis of Organic and Conventional Fresh Milk in Germany Segmented by Consumer Groups," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 115995, European Association of Agricultural Economists.
    11. Astrid Jonas & Jutta Roosen, 2008. "Demand for milk labels in Germany: organic milk, conventional brands, and retail labels," Agribusiness, John Wiley & Sons, Ltd., vol. 24(2), pages 192-206.
    12. Kasteridis, Panagiotis & Yen, Steven, 2012. "U.S. demand for organic and conventional vegetables: a Bayesian censored system approach," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 56(3), pages 1-21.
    13. Laura Mørch Andersen & Thomas Bøker Lund, 2011. "Digging deeper: How do different types of organic consumers influence the increasing organic market share?," IFRO Working Paper 2011/15, University of Copenhagen, Department of Food and Resource Economics.
    14. Bougherara Douadia & Ropars-Collet Carole & Saint-Gilles Jude, 2022. "Impact of Private Labels and Information Campaigns on Organic and Fair Trade Food Demand," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 20(1), pages 39-59, May.
    15. Wier, Mette & Hansen, Lars Gaarn & Andersen, Laura Mørch, 2003. "Consumer preferences for organic foods," MPRA Paper 60539, University Library of Munich, Germany.
    16. Seidu, Ayuba & Seale, James, 2015. "Estimating Danish Consumers’ Preference for Organic Foods: Application of a Generalized Differential Demand System," 2015 Annual Meeting, January 31-February 3, 2015, Atlanta, Georgia 196809, Southern Agricultural Economics Association.
    17. Schröckl, R., 2012. "Wie sensibel reagieren deutsche Verbraucher auf Preisänderungen bei Bio- Eiern? Eine Nachfrageanalyse mit Haushaltspanel-Daten," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 47, March.
    18. Steven C. Blank & Gary D. Thompson, 2004. "Can/Should/Will A Niche Become the Norm? Organic Agriculture's Short Past and Long Future," Contemporary Economic Policy, Western Economic Association International, vol. 22(4), pages 483-503, October.
    19. Pedro A. Alviola & Oral Capps, 2010. "Household demand analysis of organic and conventional fluid milk in the United States based on the 2004 Nielsen Homescan panel," Agribusiness, John Wiley & Sons, Ltd., vol. 26(3), pages 369-388.
    20. Durham, Catherine A., 2007. "The Impact of Environmental and Health Motivations on the Organic Share of Produce Purchases," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 36(2), pages 1-17, October.

    More about this item

    Keywords

    Organic consumption; crowding out; separability; AIDS model; home scan data;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:foi:wpaper:2013_2. 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: Geir Tveit (email available below). General contact details of provider: https://edirc.repec.org/data/foikudk.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.