Conference Agenda

This study estimates a Multiple Discrete-Continuous model to obtain demands for new fruits using combined stated preference (SP) and revealed preference (RP) data. The combined model is an application of the Multiple Discrete-Continuous Extreme Value (MDCEV) model which accounts for the continuous aspect of consumer choice. The SP data are obtained from an expenditure-based choice experiment, and the RP data are household-level scanner data collected by the Rural Development Administration of the Republic of Korea. Estimation results show that new varieties are always preferred over existing varieties in general. A likelihood ratio test suggests that the preference structure of the SP data is different to that of the RP data, yet incorporating RP data in a combined estimation greatly enhanced the significance of estimates. Using estimation results, we apply a forecasting method to derive price elasticities and expenditure elasticities of demand, willingness to pay for new varieties, and market shares. In the case of own-price elasticities, watermelon and cherry tomato are fruits where the new variety is more elastic to price change than the existing variety. On the other hand, for nectarine, tomato, and plum, the elasticity of existing variety is higher than the new variety. In all fruit types except tomato, the expenditure elasticity of the new variety is larger than the existing variety. Willingness to pay results show that consumers are willing to pay a substantial amount of money for the introduction of new varieties, although with large variability. Market share results show that introducing a new variety increases the market potential for that fruit, as the new variety does not fully replace the existing variety. These results support the importance of variety diversification for both consumers and producers in the fruit market.