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In this paper, we estimate dynamic versions of the Almost Ideal Demand System and the Linear Expenditure System in order to obtain an estimate of the demand elasticity for milk in British Columbia. This parameter has, to our knowledge, never been estimated for one province, but given the ongoning interest by the B.C. dairy industry in obtaining a larger allocation of Market Share Quota (MSQ), which is now allocated as a function of fluid milk consumption, it is timely to estimate the elasticity of demand for milk in British Columbia. Many have argued that the retail price of milk in B.C. is too high, especially when compared to prices in other western provinces, as well as the neighbouring State of Washington. The argument is that significant increases in consumption, and thereby increased allocation of MSQ could be achieved through decreases in prices. However, this depends upon the elasticity of demand which we herein estimate. Our estimate of the elasticity of demand for milk in British Columbia is -0.33, as estimated from the dynamic Almost Ideal System, and -0.40 from the dynamic Linear Expenditure System. We note that the dynamic Linear Expenditure System estimated in this study was statistically significant and met all theoretical restrictions, in particular quasi-concavity of the utility function at each observation point. We note, however, that this elasticity estimate may be interpreted as a short run estimate owing to our limited time frame for analysis. Clearly, with an elasticity estimate in the order of -0.40, "significant" increases in consumption cannot be achieved solely through decreases in prices. This paper, however, does more than simply relay elasticity estimates, for it also provides tips and techniques for estimating demand systems such as those estimated in this paper. These strategies are typically not found in textbooks or journal articles, and as such can be of great use to those estimating demand systems for the first time. In addition, this study makes use of a regional data source that has previously been unavailable to applied economists. Those who have attempted to estimate the demand for milk regionally have found that Statistics Canada does not publish regional consumption figures for most commodities. This is particularly true for the consumption of beverages in British Columbia. The data for this study were obtained privately and statistically represent bi-monthly sales of beverages in British Columbia. Thus, this paper is the first to estimate the demand for milk in British Columbia by using a demand systems approach employing data obtained from a private source (i.e. not Statistics Canada or other public sector organisations). / Land and Food Systems, Faculty of / Graduate

The objective of this research was to determine the optimal number, size, and location of fluid bottling and manufacturing plants, under a totally coordinated marketing system, in the southeastern United States. A transshipment model was developed through which economies of size in processing were taken into consideration. Sources of Grade A and B raw milk, fluid consumption centers, each a potential fluid processing site, and potential manufacturing sites were delineated. Quantities supplied or demanded at 1976 levels were estimated for each location. Consumption centers were given the option of being served from distant plants. Transportation costs were calculated from raw sources to processing sites and from processing sites to final demand points. Processing cost functions for both types of plants were specified. The results indicated that, given the data and assumptions, the economies of size in processing are not great enough to offset the diseconomies in transportation to the extent that fluid consumption centers can be served from plants in other locations at a lower total cost. The number of manufacturing plants operated was limited to the number of plants necessary to provide sufficient total processing capacity to manufacture the regional manufactured product requirement. It was concluded that considerable adjustment in the fluid processing sector has taken place with respect to location and number of plants. It was further concluded that once fluid processing locations and quantities are known, that an organization may coordinate only the assembly and manufacturing functions in a manner approaching optimal. / Master of Science