Analysis of the Demand for Berries in Mexico: An Application of the Almost Ideal Demand System (AIDS) Model

Abstract

Objective: To identify the factors affecting the demand for berries in Mexican households, as well as the behavior in face of variations in economic income.

Design/Methodology/Approach: In order to analyze the demand, microdata were used from the National Income-Expenditure Survey of Households 2018 (Encuesta Nacional Ingreso Gasto de los Hogares, ENIGH) from the National Institute of Statistics and Geography (Instituto Nacional de Estadística, Geografía e Informática, INEGI), and for its modelling the Almost Ideal Demand System (AIDS) model was used.

Results: Because of their Marshallian elasticity, berries are an elastic good (-1.0316), and because of their expenditure elasticity they are a luxury good (1.0691). In terms of crossed Marshallian elasticities, sweet fruits and sugary beverages were identified as substitute goods with elasticity of 0.0013 and 0.0380, respectively, while semi-acid fruits and melons would be complementary goods, with elasticities of -0.0191 and -0.0184, respectively.

Study Limitations/Implications: Given that most of the time series of the berries lack disaggregation and sufficient information, it is difficult to analyze each component of the group separately; therefore, it was decided to analyze the group of berries and its relationship with other goods; in addition, the ENIGH database was selected, which provides more information.

Conclusions: There are state differences in the response to changes in prices and income with regard to the demand for berries, so that facing a generalized increase in household income consumption would increase much more in the center of the country than in the south-southeast.