Dynamic demand analysis of India's domestic coffee market by R. Venkatram and Satish Y. Deodhar (Working Paper, No. 99-11-05/1561)

By: Contributor(s): Material type: TextTextPublication details: Ahmedabad Indian Institute of Management 1999 Description: 14 pSubject(s): DDC classification:
  • WP 99-11-05 (1561)
Summary: Coffee, although an important commodity in India's agricultural exports, has faced fluctuating international prices and decreasing unit value realisation, especially in the post-reform period. Hence, domestic market for coffee cannot be neglected altogether. In fact, Coffee Board has proposed a promotional campaign to increase domestic demand for coffee. In this context, it becomes necessary to understand weather the emphasis should be on price incentives or nonprice factors. We estimate coffee demand for the Indian domestic market using the dynamic error-correction methodology (ECM). Results show that while demand for coffee is inelastic in the long-run, it is highly inelastic in the short-run. This suggests that Coffee Board may focus efforts on non-price factors rather than price incentives in their generic coffee promotional campaign.
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Working Paper Vikram Sarabhai Library WP 99-11-05 (1561) (Browse shelf(Opens below)) Available WP001561

Coffee, although an important commodity in India's agricultural exports, has faced fluctuating international prices and decreasing unit value realisation, especially in the post-reform period. Hence, domestic market for coffee cannot be neglected altogether. In fact, Coffee Board has proposed a promotional campaign to increase domestic demand for coffee. In this context, it becomes necessary to understand weather the emphasis should be on price incentives or nonprice factors. We estimate coffee demand for the Indian domestic market using the dynamic error-correction methodology (ECM). Results show that while demand for coffee is inelastic in the long-run, it is highly inelastic in the short-run. This suggests that Coffee Board may focus efforts on non-price factors rather than price incentives in their generic coffee promotional campaign.

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