Abstract
U.S. fluid milk consumption has changed dramatically since the early 1970s. Whole milk accounted for over 81% of commercial fluid milk disappearance in 1970. By 1993, this percentage was less than 39%. A three-equation fluid milk demand system is estimated for fluid milks that vary by fat content. The household panel data set used includes over 4,300 households that recorded fluid milk purchased for at-home consumption over a 12-month period. Given that many of these households did not consume one or more of the three milk types, the econometric model explicitly incorporates the censored nature of these commodity demands. Own- and cross-price and substitution estimated along with effects of household demographic characteristics.
