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Estimating the Demand for Sensory Quality – Theoretical Considerations and an Empirical Application to Specialty Coffee

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Author Info

  • Teuber, Ramona

Abstract

An increasing product differentiation coupled with an increasing availability of electronic data has boosted the number of hedonic price analyses applied to food and agricultural products. Most of these studies estimate the first stage of a complete two-stage model as proposed by ROSEN. However, there are also a few studies that estimate the second stage, i.e. supply and demand functions for characteristics. The present paper reviews both the theoretical and applied literature on Rosen’s two-stage model in the context of food and agricultural economics. Based on these findings, a theoretical model for specialty coffee auction data is proposed and tested empirically. The empirical model comprises non-linear hedonic bid functions at stage one and an inverse demand function for one characteristic, the sensory quality score (SQS), at stage two. The first-stage results indicate a high variability of the marginal price of the SQS across different auctions, i.e. across time and space. The second-stage results suggest that the marginal prices of the SQS increased in the analysed period 2003- 2009 and that country-of-origin and buyer effects are important. The highest marginal prices are paid for Rwandan and Honduran coffee. At first glance, this is surprising, since at the first stage Honduran coffees are almost always sold at discounted prices compared to coffees of other origins. However, it seems that the SQS is a much more important quality cue for a coffee origin with a low reputation than for a coffee origin with a well-established reputation in the marketplace. Die zunehmende Produktdifferenzierung und Verfügbarkeit elektronischer Datensätze hat zu einer stetig steigenden Zahl hedonischer Analysen für Agrarprodukte und Lebensmittel geführt. Die Mehrzahl dieser Studien schätzt hierbei die erste Stufe des von ROSEN theoretisch hergeleiteten zweistufigen hedonischen Modells. Es gibt jedoch auch einige wenige Studien, die auch die zweite Stufe, d.h. Angebots- bzw. Nachfragefunktionen für Eigenschaften schätzen. Der vorliegende Beitrag analysiert die bisherige theoretische und empirische Literatur zu zweistufigen hedonischen Modellen im Kontext der Agrar- und Ernährungsökonomie und leitet darauf basierend ein theoretisches und empirisches zweistufiges Modell für Spezialitätenkaffee ab. Das empirische Modell besteht aus einer nichtlinearen hedonischen Preisfunktion auf der ersten Stufe und einer inversen Nachfragefunktion für eine Produkteigenschaft, der sensorischen Qualitätspunktzahl (SQS), auf der zweiten Stufe. Die Ergebnisse der ersten Stufe weisen eine hohe Variabilität der impliziten Preise dieser Eigenschaft sowohl über die Zeit als auch über Regionen hinweg nach. Die Ergebnisse der zweiten Stufe belegen einen Anstieg der impliziten Preise der sensorischen Qualitätspunktzahl in der betrachteten Zeitperiode 2003-2009 und signifikante Anbauländer- und Käufereffekte. Kaffee aus Honduras erzielt hierbei neben Kaffee aus Rwanda die höchsten impliziten Preise. Dieses Ergebnis erscheint zunächst überraschend, da Kaffee aus diesen Ursprungsländern typischerweise auf der ersten Stufe diskontiert wird. Auf den zweiten Blick erscheint dieses Ergebnis aber durchaus plausibel. Für Kaffee aus Ländern mit einer bisher nur gering ausgeprägten Reputation für Qualität ist die Qualitätsbewertung signifikant bedeutsamer als für Kaffees aus Ländern mit einer etablierten Reputation für Qualität.

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Bibliographic Info

Article provided by Journal of International Agricultural Trade and Development in its journal Journal of International Agricultural Trade and Development.

Volume (Year): 59 (2010)
Issue (Month): 3 ()
Pages:

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Handle: RePEc:ags:joiatd:145292

Contact details of provider:
Web page: http://www.ndsu.nodak.edu/ndsu/miljkovi/

Related research

Keywords: two-stage hedonic models; implicit prices; sensor quality score; specialty coffee; zweistufige hedonische Modelle; implizite Preise; sensorische Qualitätsbewertung; Spezialitätenkaffee; Consumer/Household Economics; Demand and Price Analysis; Food Consumption/Nutrition/Food Safety; Marketing;

References

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Cited by:
  1. Wilson, Adam P. & Wilson, Norbert L., 2013. "The Economics of Quality in the Specialty Coffee Industry: Insights from the Cup of Excellence Auction Programs," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150721, Agricultural and Applied Economics Association.

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