Consumer Preference, welfare effect and Industrial Policy in Ethiopia The Case of Pasta Market in Dire Dawa City

The empirical studies indicated that consumer’s preferences affect the process of policy formation and implementation especially in developing country like Ethiopia. Therefore this study has focused on the degree of pasta market power, factors affecting choice of pasta foods, and welfare effect of opening pasta market in the region in line with the industrial policy of Eastern Ethiopia. To address the objectives 299 samples households were surveyed randomly and inferential statistical techniques were utilized. In the study it is found that, given their high price, the imported pasta have dominated the pasta market in Eastern Ethiopia. We also found that, greater social welfare loss in the area - Birr 89,700 per month or Birr 1,076,400 per year. Thus it is advisable for policy practitioners to consider important wanted attributes of food items (like Safe for cooking & eating, sweetness) which strongly affect the food preferences of consumers in the area.