CONSUMERS’ RESPONSE TO MILK QUALITY: A COMPARISON OF URBAN AND RURAL PAKISTAN

A log-log-inverse econometric model representing nonlinear Engel curve relationship for fresh milk in Pakistan proved to be a valid estimation technique of quantity and expenditure elasticities with respect to consumers’ income. This model, when used for urban and rural households separately indicated a substantial difference in the quantity and expenditure elasticities of fresh milk between the urban and rural consumers of Pakistan during 2001. The quality elasticity which is the difference between expenditure and quantity elasticity turned out to be positive with an estimated value of 0.3808 and 0.2239 for the urban and rural households respectively indicating an increased responsiveness of the urban consumers to milk quality compared to those in the rural areas.