I Say Milk, You Say Mylk: Substitution Patterns and Separability in a Broadened Milk Category

This study tests the assumption of weak separability between demand for dairy and nondairy milk products by using food scanner data from 2012 to 2017 and estimating linear-approximate EASI demand systems. Our results show that the weak separability structures can be rejected. First, this finding shows that nondairy milk products compete with dairy milk for consumersÕ budget allocated to milk. Second, although milk demand studies often do not include nondairy milk, or assume weak separability, the exclusion of these productsÑor the separability assumptionsÑmay lead to biased estimates.