The Analysis of The Relationship Between Fruit Prices and Demand Quantities in Taiwan

The objective of the research is to investigate the relationship between prices and demand quantities among six kinds of fruits in Taiwan, including guava, banana, pineapple mango, papaya and muskmelon. The price and cross-price elasticities are estimated during the period from 1999 to 2015 through the methodology of multiple regression. Meanwhile, the research analyzes their relations during the harvest time. The results are as follows. First, during the full fruiting period of mango, the estimated price elasticity of mango during May and June is -1.02. The result shows that consumers are more sensitive to the price change of mango than that of other six kinds of fruits investigated.to the price change of other fruits. On the other hand, Guava, banana, papaya, pineapple and muskmelon are less price elastic. With respect to the cross elasticities, they show the positive signs among fruits and are inferred to be substitutive relationships. Second, during the full fruiting period of muskmelon, the estimated own-price elasticity of pineapple in March and April is positive, which does not conform to the demand theory. And the own-price elasticity of other fruits is less than 1 and is inelastic. On the other hand, the cross elasticities among fruits in November and December have positive signs, and therefore they indicate the substitutive relations. Finally, the research break the sample period down for further investigation in detail. It is found that most of the six fruits are substitutes during 1999 to 2004. The research also find that there are close price-quantity relationships for banana and mango during 2005-2009 and for banana and pineapple during 2010-2015, respectively.