Overview
The demand estimates for different ornamental plants provide insights to policy makers who regulate and promote the ornamental plant markets. The foliage plants are found to be more price-responsive relative to annual and perennial plants. We also find that a majority of plants are expenditure-elastic, and that the expenditure elasticities for foliage products show great variability. Finally, plants in the same group appear to be closer substitutes.
Abstract
This study provides an empirical analysis of demand for a large group of ornamental plants using a theory-based demand model. Specifically, consumer preferences are represented by the Almost Ideal Demand System where allowance is made for demand censoring. Given that revealed-preference data are usually limited to certain ornamental plants and geographical locations, we exploit unique hypothetical purchase data collected via an online survey regarding 16 annual, perennial, and foliage plants from across the United States. The effect of various socio-economic and demographic factors on demand for plants is quantified. Our findings indicate that ornamental plants are predominantly price-elastic with foliage plants being more price-responsive vis-a-vis other plant categories. Further, a majority of plants are expenditure-elastic with the estimates of foliage plants manifesting the greatest variability. Finally, plants in the same category appear to be closer substitutes. Results benefit ornamental plant industry stakeholders as they determine the best pricing strategies in their specific markets.
