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New fruits are actively developed and provided to the Korean market. Those new goods potentially enhance farm income and increase consumer welfare providing consumption varieties. However, it is often observed that prices of new fruits decline sharply as their market shares increase, and hence, the later technology adopters do not earn profits as much as they expected. One of the reasons could be the relatively low price elasticity of new fruit demands. We estimate the demand elasticities for new fruits with high probabilities of entering the Korean market. We estimate an MDCEV demand system that consists of existing goods and new goods allowing corner solutions. The data were collected via a volumetric choice experiment (VCE) where subjects are asked to choose the items and their purchase amounts simultaneously. Estimation results show that demands for new fruits are less elastic than those for existing fruits. We also estimated the additional willingness to pays (WTPs) for new fruits, and found that higher income and smaller-sized families and female consumers have higher WTPs for new fruits. |
