Estimating Consumers’ Response to Quality: A Case of Pakistan Fruits

A log-log-inverse econometric model, representing nonlinear Engel curve relationship for Pakistan fruits proved to be a valid estimation technique of quantity and expenditure elasticities with respect to consumers income. This model, when incorporated with dummy-variable for time-variations, indicated substantial changes in quantity and expenditure elasticities over time-period 2001-2005. During this period, the quantity and expenditure elasticities witnessed statistically significant changes, not only in all fruits category but also in individual fruit cases of apple, banana, citrus, dates, guava mango; however, grapes remained an exception. The quality elasticity, which resulted as the difference between expenditure elasticity and quantity elasticity, turned out to be positive for kall fruits category, as well as, for almost all individual fruits; however, quality elasticity enhanced in magnitude in all fruits category from 0.0707 to 0.1211 for year 2001 and 2005 and in cases of apple, banana, guava, grapes and mango and declined in case of citrus and dates