Uncompensated and compensated elasticities were calculated from estimated parameters
of the LA/AIDS. The uncompensated and compensated price elasticities were similar in terms of
magnitude and statistical significance. All own-price elasticities are negative and statistically
significant. The own- price elasticity of Hanwoo beef is most elastic, followed by imported beef,
mollusks, fish, pork, crustaceans, and chicken.
Expenditure elasticities for all meats are positive and significant at the 5 percent
significance level. The expenditure elasticity for imported beef is the most elastic, implying that
Korea will increase beef imports as the country increases its expenditure for meat and fish
products.
Because of trade liberalization, meat imports in Korea will increase in the future. If per
capita income continues to increase, beef imports would also increase since Korean consumers
prefer beef to other meat, and Hanwoo beef is more expensive than imported beef. The price of
Hanwoo beef is generally two times higher than that of imported beef. Consumers in Korea are
willing to pay a premium for Hanwoo beef because they prefer Hanwoo beef to imported beef.
However, if cheap and better quality imported beef were introduced to Korean consumers,
Hanwoo beef would not be able to maintain market share in Korea.
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