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Demand Elasticities from a Discrete Choice Model: The Natural Christmas Tree Market

George C. Davis and Michael K. Wohlgenant
American Journal of Agricultural Economics
Vol. 75, No. 3 (Aug., 1993), pp. 730-738
Stable URL: http://www.jstor.org/stable/1243580
Page Count: 9
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Demand Elasticities from a Discrete Choice Model: The Natural Christmas Tree Market
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Abstract

A procedure is demonstrated for estimating market-level demand elasticities from household data suffering from sample selectivity problems. The procedure uses McFadden's nested multinomial logit model and is applied to the natural Christmas tree market. Results indicate that the own-price elasticity of natural Christmas trees is -0.674 and the cross price elasticity of natural Christmas trees with respect to artificial Christmas trees is 0.188. These are the first known demand elasticity estimates for the natural Christmas tree market.

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