A Random Coefficients Model of Seafood Demand: Implications for Consumer Preferences and Substitution Patterns

Discrete choice models of demand are growing in popularity for understanding markets for seafood, but have thus far been limited to applications using individual-level choice data. The random coefficients logit model is a discrete choice demand model designed for aggregate sales data and imparts a n...

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Bibliographic Details
Published in:Marine resource economics 2023-04, Vol.38 (2), p.113-133
Main Authors: Ray, Kevin D., Lew, Daniel K., Kosaka, Rosemary
Format: Article
Language:English
Subjects:
Coefficients
Economic analysis
Fish fillets
Salmon
Seafood
Seafoods
Underwater resources
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Summary:Discrete choice models of demand are growing in popularity for understanding markets for seafood, but have thus far been limited to applications using individual-level choice data. The random coefficients logit model is a discrete choice demand model designed for aggregate sales data and imparts a number of theoretical and empirical advantages. Instrumental variables account for price endogeneity, which can arise when there are unobserved product characteristics. Furthermore, correlated preferences can be accommodated in the random coefficients as well as through demographic interactions, which is especially important for seafood where product characteristics are primarily qualitative. We estimate this model for salmon fillets using four years of county-level seafood sales in California, and demonstrate the insights that can be drawn regarding consumer preferences and substitution patterns. Although the model is computationally burdensome, it offers considerable potential for further seafood demand analysis.
ISSN:0738-1360
2334-5985
DOI:10.1086/723730