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Economic techniques to estimate the demand for sustainable products: a case study for fair trade and organic coffee in the United Kingdom

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Author Info

  • Galarraga, Ibon
  • Markandya, Anil

Abstract

The hedonic approach is used in this paper to estimate how much is paid for the fair trade/organic characteristic of the coffee in the British market. This information is later combined with the Quantity Based Demand System (QBDS) model -developed by the authors- and the Almost Ideal Demand System (AIDS) (Deaton and Muellbauer, 1980) to completely determine the demand function for different coffees. The QBDS model is easier to handle and less data demanding than the AIDS model in this study. Resumen El presente artículo se basa en la utilización del método hedónico para la estimación de la cantidad que se paga por la característica de "Orgánico/Comercio Justo" del café en el mercado británico. La información obtenida se combina después con el modelo Sistema de Demanda Basado en Cantidades (QBDS) - desarrollado por los autores- y el Sistema de Demanda Casi Ideal (AIDS) (Deaton and Muellbauer, 1980) para determinar por completo la función de demanda de los diferentes tipos de café. El modelo QBDS es más sencillo en su utilización y necesita de menos datos que el modelo AIDS. Palabras clave: sistemas de demanda, método hedónico, demanda de café, etiquetado

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File URL: http://purl.umn.edu/28732
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Bibliographic Info

Article provided by Spanish Association of Agricultural Economists in its journal Economia Agraria y Recursos Naturales.

Volume (Year): 04 (2004)
Issue (Month): 07 ()
Pages:

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Handle: RePEc:ags:earnsa:28732

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Related research

Keywords: demand systems; hedonic method; coffee demand; labelling; C13; C21; D12;

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References

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  1. Wesley Nimon & John Beghin, 1999. "Are Eco-Labels Valuable? Evidence From the Apparel Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(4), pages 801-811.
  2. Palmquist, Raymond B, 1984. "Estimating the Demand for the Characteristics of Housing," The Review of Economics and Statistics, MIT Press, vol. 66(3), pages 394-404, August.
  3. Anderson, Gordon & Blundell, Richard, 1983. "Testing Restrictions in a Flexible Dynamic Demand System: An Application to Consumers' Expenditure in Canada," Review of Economic Studies, Wiley Blackwell, vol. 50(3), pages 397-410, July.
  4. Stanley, Linda R & Tschirhart, John, 1991. "Hedonic Prices for a Nondurable Good: The Case of Breakfast Cereals," The Review of Economics and Statistics, MIT Press, vol. 73(3), pages 537-41, August.
  5. J. A. Molina, 1994. "Food Demand In Spain: An Application Of The Almost Ideal System," Journal of Agricultural Economics, Wiley Blackwell, vol. 45(2), pages 252-258.
  6. P. Y. Chen & M. M. Veeman, 1991. "An Almost Ideal Demand System Analysis for Meats with Habit Formation and Structural Change," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 39(2), pages 223-235, 07.
  7. Nerlove, Marc, 1995. "Hedonic price functions and the measurement of preferences: The case of Swedish wine consumers," European Economic Review, Elsevier, vol. 39(9), pages 1697-1716, December.
  8. Freeman, A Myrick, III, 1979. " Hedonic Prices, Property Values and Measuring Environmental Benefits: A Survey of the Issues," Scandinavian Journal of Economics, Wiley Blackwell, vol. 81(2), pages 154-73.
  9. Ibon Galarraga & Anil Markandya, 2003. "The analysis of welfare effects of an environmental product tax: an application to the taxation of car tyres in Hungary," Fiscal Studies, Institute for Fiscal Studies, vol. 24(1), pages 97-114, March.
  10. Jeffrey R. Blend & Eileen O. van Ravenswaay, 1999. "Measuring Consumer Demand for Ecolabeled Apples," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(5), pages 1072-1077.
  11. Combris, Pierre & Lecocq, Sebastien & Visser, Michael, 1997. "Estimation for a Hedonic Price Equation for Bordeaux Wine: Does Quality Matter?," Economic Journal, Royal Economic Society, vol. 107(441), pages 390-402, March.
  12. Pierani, P & Rizzi, P L, 1991. "An Econometric Analysis of the Olive Oil Market in Italy," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 18(1), pages 37-60.
  13. Cropper, Maureen L & Deck, Leland B & McConnell, Kenneth E, 1988. "On the Choice of Functional Form for Hedonic Price Functions," The Review of Economics and Statistics, MIT Press, vol. 70(4), pages 668-75, November.
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Citations

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Cited by:
  1. Schollenberg, Linda, 2011. "So how much do you pay for ethical consumption? Estimating the hedonic price for Fair Trade coffee in Sweden," HUI Working Papers 31, HUI Research.
  2. Sengupta, Aditi, 2012. "Investment in cleaner technology and signaling distortions in a market with green consumers," Journal of Environmental Economics and Management, Elsevier, vol. 64(3), pages 468-480.
  3. Galarraga, Ibon & Markandya, Anil, 2006. "A proposal to correct external effects in the coffee market: a tax on regular coffee and tea to subsidise the fair trade coffee," Economia Agraria y Recursos Naturales, Spanish Association of Agricultural Economists, vol. 6(12).
  4. Veronika Andorfer & Ulf Liebe, 2012. "Research on Fair Trade Consumption—A Review," Journal of Business Ethics, Springer, vol. 106(4), pages 415-435, April.
  5. Yang, Shang-Ho & Hu, Wuyang & Mupandawana, Malvern & Liu, Yun, 2012. "Consumer Willingness to Pay for Fair Trade Coffee: A Chinese Case Study," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 44(01), February.
  6. Aditi Sengupta, 2010. "Signaling environmental quality to green consumers and the incentive to invest in cleaner technology: Effect of environmental regulation," Departmental Working Papers 1001, Southern Methodist University, Department of Economics.
  7. Ibon Galarraga & David Heres Del Valle & Mikel González-Eguino, 2011. "Price Premium for High-Efficiency Refrigerators and Calculation of Price-Elasticities for Close-Substitutes: Combining Hedonic Pricing and Demand Systems," Working Papers 2011-07, BC3.
  8. Yang, Shang-Ho & Hu, Wuyang, 2011. "Using a Modified Payment Card Survey on Chinese Consumers’ Willingness to Pay for Fair Trade Coffee: Would the Starting Point Matter," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103720, Agricultural and Applied Economics Association.

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