Fruit and Vegetable Quality

imization framework permit the calculation of the marginal rate of sub-
stitution between expenditures and the volume of an attribute. There-
fore, results of Hedonic analysis provide insights about the importance
of specific attributes to buyers expressed in terms of money, a measure
easily understood by all parties involved in marketing fresh produce.
Economists use the Hedonic technique at various market levels, e.g.,
farm, wholesale, or retail. Farm- or wholesale-level demand for attrib-
utes is assumed to be derived from the retail level. This assumption holds
when the marketing margin remains unchanged for all prices and quan-
tities of the product in question. It implies that slopes of farm, whole-
sale, and retail demand curves are identical. In reality, some variation
occurs, but it is generally recognized that the demand curves have sim-
ilar slopes over the studied range of prices and quantities. Violation of
this assumption renders the analysis invalid and of little practical rele-
vance.
Various studies of Hedonic techniques have been based on time se-
ries and cross-sectional data. Jordan et al. (1985) used data collected on
tomato prices registered on a single day assuming the fixed supply of
produce and its characteristics. The use of cross-sectional data to price
attributes of fresh produce closely reflects market conditions. The as-
sumption of fixed supply is plausible for studying consumer demand for
produce with short shelf life. The condition of leafy vegetables or root
vegetables sold with leaves deteriorates particularly fast because of a
large transpiration surface. Other vegetables, including many root veg-
etables with other plant parts detached, may remain in good condition
for an extended period of time if properly handled.
Rosen (1974) applied Hedonic technique to time series data, where
product supply responds to the demand for a quality attribute over a pe-
riod of time. Supply is no longer fixed and attribute prices can be esti-
mated by a system of supply-and-demand equations. Data requirements
for an empirical application of this approach are considerable and fre-
quently insufficient to conduct an empirical study. Results based on a
simultaneous system of supply-and-demand equations estimated using
time series data provide insights about the structural nature of the mar-
ket, but may be inadequate to explain behavior observed on any partic-
ular day. On the other hand, cross-sectional data capture the situation in
a particular moment in time, which is assumed to be continuously repli-
cated. Users of information stemming from Hedonic price studies should
be aware of limitations of each approach. Weather, cultivar replacement,
seasonality, multiple grades and standards, poor record keeping of pro-

234 ECONOMICS OF QUALITY