ABSTRACT

This study employed a two-step estimation procedure that involved a decision model and a censored demand system model for nine categories of apparel. The results of the decision model indicated that garments’ own prices, age, female employment, gender, regions, and presence of children significantly influence purchase decisions. Probabilities of purchasing male shirts were positive and own-price inelastic, whereas probabilities of purchasing female jeans, male jeans, male shorts, male slacks, female slacks, skirts, female shorts, and dresses were negative and own-price elastic. The probability of purchasing one garment, generally, was not responsive to price changes of another garment.

Male shirts, male shorts, female jeans, female slacks, skirts, female shorts, and dresses are necessary goods, while male jeans and male slacks are luxury goods. Demands for male shirts and male jeans were price-inelastic and demands for male shorts, male slacks, female slacks, skirts, female shorts, and dresses were price-elastic. Estimated inelastic cross-price elasticities suggest that pricing strategies such as price promotion to increase sale of one garment type would be limited to the targeted products.

Higher expenditure shares were generally associated with higher level of cotton blend. The extent to which expenditure share increased due to higher cotton blends depended on the garment itself. The results further suggested that marketing strategies solely focused on product origins might not increase market share for domestically produced apparel.