A Comparison of Demand System Models Peculiar to a Granular Array of Dairy Products

Demand interrelationships for eight dairy categories—margarine and plant-based milk alternatives—were estimated using the Quadratic Almost Ideal Demand System (QUAIDS) and the Barten Synthetic Model (BSM), based on data derived from Nielsen covering the period January 2010 to November 2015. The own-price elasticities, with few exceptions, were in the elastic range. Those derived from the BSM typically were larger than those derived from the QUAIDS. All products considered were necessities. The BSM discerned more statistically significant compensated cross-price elasticities than the QUAIDS. Most of the statistically significant cross-price elasticities from the demand models were positive, indicative of substitutability among the products.