Demand Estimation for US Apple Juice Imports: A Restricted Source Differentiated AIDS Model

Although this paper focuses on apple juice, a restricted version of source differentiated Almost Ideal Demand System (RSDAIDS) was used to examine U.S. import demand for fresh apple, apple juice and other processed apple. Apple imports were differentiated by type and source of origin and the RSDAIDS model was estimated after imposing the general demand restrictions of adding-up, homogeneity and slutsky symmetry. Seasonality and trend variables were also included on the model. The estimation results showed that U.S. demand for apple juice from China was price inelastic with relatively high expenditure elasticity. We believe the result partially explains why China managed to have a 60 percent import market share in the sub-market despite U.S. imposition of high duties on Chinese apple juice.