When a traceability system takes place, either when mandatory or voluntary, many questions arise that need to beaddressed and answered. One of the firsts concerns whether it introduces new costs with no gain in efficiency or,on the contrary, the system efficiency increases lowering costs and, as a consequence, market price of the good inhand. Among others, another issue that only rarely is addressed regards the effect of a price change on the finalmarket. The objective of this paper was to simulate the effect on fresh Italian vegetables market of prices changedue to a newer traceability procedure, focusing on early potato. Reasons why early potato was the main object ofour study will be explained in detail later in the paper. Moreover, this study concerns a demand system estimationthat has, as main goal, the measurement of own and cross price elasticities as well as expenditure elasticities. Suchestimations are not strictly related with traceability because they measure any change in quantity demanded due toprice changes due to any market perturbation. However, since early potato is experiencing a peculiar market andchain change in Italy, our simulation is meant to reason in terms of a “what if” approach, formally simulating theeffect of any change in price due to an hypothesis of traceability system involved. In order to estimate a demandsystem, real household consumption data (3,000 observations) of a statistically representative sample of the Italianpopulation of households was taken into account. Relevant measures of market variables were estimated by meansof a Linear Almost Ideal Demand System implementing a large set of fresh vegetables: potato split in early and late,cabbage, salad, mushrooms, fruits vegetables, roots, asparagus, onion, tomatoes, peppers, cucumbers, beans,zucchinis and others.
