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http://dx.doi.org/10.11625/KJOA.2015.23.4.703

An Effect of Orange Import on Domestic Fruits and Vegetables Price in Korea  

Cho, Jae-Hwan (부산대학교)
Publication Information
Korean Journal of Organic Agriculture / v.23, no.4, 2015 , pp. 703-713 More about this Journal
Abstract
A Linear Approximated Inverse Almost Ideal Demand System, suggested by Eales and Unnevehr, is estimated with monthly data set of Korean fruits consumption. LA/IAIDS consists of 6 demand equations which correspond to domestically produced Hanrabong, overwintering mandarin, strawberry, melon and tomato with imported orange. The results indicate that price and scale flexibilities are negative, as expected. And the significance is that a 10% increase in imported orange quantity is associated with 5.5% declines in the price of Korean Hanrabong while the price of other fruits is minimally affected. In addition, the estimate of scale flexibility of Hanrabong (-2.96) is much smaller than any other fruit. Hanrabong farmer might be in the face of deficit operation as a consequence of the substitution effect if orange would be imported in accordance with the Korea-U.S. free trade agreement.
Keywords
LA/IAIDS; impact of imported orange; price and scale flexibility;
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