Elasticities of Chinese Demand for Imports of Melons from Vietnam and Myanmar

Abstract

Vietnam and Myanmar are major exporters of melons (Citrullus lanatus) to China. Among all fresh fruits, melons account for Myanmar’s and Vietnam’s largest export volume and values. Over 90% of Myanmar’s melons are exported via border trade, primarily to China. Measuring the own- and cross-price elasticities of imported melons into China that come from Vietnam and Myanmar can help each exporter understand the market potential for their melons. The objective of the study was to estimate the own- and cross-price elasticities of imported melons into China differentiated by exporting country. The demand system of imported melons into China was estimated using a source-differentiated Linear Approximation of the Almost Ideal Demand System (LA-AIDS). The results suggest that imported melons are weakly separable from other imported fruits. While melons from Vietnam and Myanmar are substitutes for each other, the price of melons from the rest of the world (ROW) did not have a significant effect on China’s imports of melons from Vietnam or Myanmar. The estimated coefficients from the seasonal dummy variables included in the demand equations show little seasonality in the market shares of Vietnam, Myanmar, and the ROW for melon imports to China.