Indian Journal of Economics and Development

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Price Determinants of Dry Chilies in Karnataka


Affiliations
1 Department of Economics, Vijayanagara Srikrishnadevaraya University, Jnana Sagara Campus, Bellary, Karnataka – 583105, India
 

Objectives: Chilli is an important spice crop grown throughout India and accounts for 36% of world’s production. Karnataka is the second largest producer of Chillies with 12% share in Indian production after Andhra Pradesh (57% share in Indian Production). Price of chilies depends on various factors such as quality of chillies, grades, and seasonality. Impact of each of these factors, are yet to be estimated. Objective of this study is to quantify the factors that affect the price of dry chilies.

Methods: We estimate a hedonic price function, which explains the price of chillies in terms of their characteristics. We use a least squares regression model after corrections for the heteroscedasticty and multicollinearity to explain variability in price.

Findings: The model indicates that statistically significant differences exist in the prices of varieties, and across markets even after controlling for quality characteristics. Also, with every 1% increase in arrivals, the price of chillies increased by 0.05%.

Applications: Results from our model could be useful for improved marketing and appropriate policy design. Relationships between price and quality characteristics could be utilized to optimize farmer revenues.


Keywords

Dry Chillies, Hedonic Price Analysis, Chilly Price Determinants, Chilli Quality Characteristics.
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Notifications

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  • Price Determinants of Dry Chilies in Karnataka

Abstract Views: 219  |  PDF Views: 158

Authors

Srinivasa Sasdhar Ponnaluru
Department of Economics, Vijayanagara Srikrishnadevaraya University, Jnana Sagara Campus, Bellary, Karnataka – 583105, India

Abstract


Objectives: Chilli is an important spice crop grown throughout India and accounts for 36% of world’s production. Karnataka is the second largest producer of Chillies with 12% share in Indian production after Andhra Pradesh (57% share in Indian Production). Price of chilies depends on various factors such as quality of chillies, grades, and seasonality. Impact of each of these factors, are yet to be estimated. Objective of this study is to quantify the factors that affect the price of dry chilies.

Methods: We estimate a hedonic price function, which explains the price of chillies in terms of their characteristics. We use a least squares regression model after corrections for the heteroscedasticty and multicollinearity to explain variability in price.

Findings: The model indicates that statistically significant differences exist in the prices of varieties, and across markets even after controlling for quality characteristics. Also, with every 1% increase in arrivals, the price of chillies increased by 0.05%.

Applications: Results from our model could be useful for improved marketing and appropriate policy design. Relationships between price and quality characteristics could be utilized to optimize farmer revenues.


Keywords


Dry Chillies, Hedonic Price Analysis, Chilly Price Determinants, Chilli Quality Characteristics.

References