DefinePK

Abstract

This paper provides the estimation of complete milk product demand elasticity matrix in case of Pakistan. Milk products are categorized into fresh milk, lassi and tetra pack milk.LA/ AIDS model is run by using HIES survey data from 2018to 2019. Own & cross-price and consumers’ income elasticities are estimated to find the impact of variation in the price of milk products and income. The outcome of Marshallian own-price elasticity for milk products reveals that prices & demand of milk product has inverse relation. Expenditures elasticities of milk product expose them as luxury items (elastic goods). The results of uncompensated cross price elasticities reveal that fresh milk and tetra pack milk are substitutable commodities while fresh milk and lassi are complementary goods. In developing countries like Pakistan, it is necessary for food policy makers to considers the price elasticities while imposing the taxes on the milk product. Milk products are basic food items and imposition of tax on these products could reduce the consumption of low-class households as well as middle class household and both have to face the problem of food security.