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Volume 7, Issue 4, August Issue - 2019, Pages:387-395

Authors: Abdulaziz M.Al-Duwais, Mahmoud M.Alderiny, Alaa A.kotb, Eman T. Alropy, Sharaf Eldin B. Ahamed, Mirza B. Baig
Abstract: The main objective of this research was to estimate the demand function for imports of apples, oranges, and bananas to Saudi Arabia, as these are the most important fruits in the Saudi diet. Using annual data for imports of oranges, apples, and bananas to the Kingdom during the period 1980-2015, an almost ideal demand system model was utilized to identify the competitive relationships between the main fruits(apples, oranges, and bananas). The coefficients of the model were estimated using the seemingly unrelated regression and iterative-seemingly unrelated regression methods, with addition, homogeneity, and symmetry conditions imposed so that the estimated models conform to demand theory and satisfy the Slutsky condition. The elasticities of price, cross-sectional, and expenditure demand for each commodity were estimated. The results found that the almost ideal demand system for apples, oranges, and bananas fulfills the addition requirement. In addition, the demand equations for the Kingdom's imports of these fruits are homogenous at zero-grade, and it was found that all the price elasticities (self and cross) and the elasticity of expenditure are consistent with economic theory.
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