HEDONIC PRICING OF MILK AT RETAIL LEVEL: A Case of Faisalabad, Pakistan

The study investigates as to how different attributes influence the retail price using milk as a case study. The analysis of this study is based on the ‘revealed preference theory’ using ‘hedonic price analysis’. For this purpose the data was collected by use of a questionnaire and by obtaining milk samples from the household consumers of Faisalabad city of Pakistan. Linear functional form was used to estimate influence of milk components and sensory variables as perceived by consumers on the price of milk. Findings of the study indicate that various attributes (i.e., fat, solid-not-fat, total plate count, aroma, color, etc.,) has significant impact on the price of milk. The results suggest that the government should take appropriate measures to improve the quality of milk through check-points and installation of milk testing laboratories. Provision of cooling tanks/chilling units should be installed at producer-centres/associations; and refrigerated transportation would also help to improve the quality of milk and prevent milk spoilage