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Estimating the Welfare Loss to Consumers When Food Labels Do Not Adequately Inform: An Application to Fair Trade Certification

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Author Info

  • Rousu Matthew C.

    (Susquehanna University)

  • Corrigan Jay R.

    (Kenyon College)

Abstract

Government officials and other policymakers often face difficult decisions determining what information must be provided to consumers in the limited space available on food labels. An ideal label will cause consumers to make the same purchase that they would make if they had all relevant information, while an inferior label will induce a consumer to purchase a product he would not purchase if more information were available or to forgo purchasing a product that would have yielded positive consumer surplus. We present the design and results of an experimental auction that allows researchers to compare several alternative labels in order to determine the welfare loss from labels that do not adequately inform consumers. Further, we compare a set of candidate labels to assess whether one of the labels is better or worse at informing consumers.

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File URL: http://www.degruyter.com/view/j/jafio.2008.6.1/jafio.2008.6.1.1212/jafio.2008.6.1.1212.xml?format=INT
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Bibliographic Info

Article provided by De Gruyter in its journal Journal of Agricultural & Food Industrial Organization.

Volume (Year): 6 (2008)
Issue (Month): 1 (May)
Pages: 1-26

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Handle: RePEc:bpj:bjafio:v:6:y:2008:i:1:n:3

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Web page: http://www.degruyter.com

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Web: http://www.degruyter.com/view/j/jafio

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Cited by:
  1. Laurent Muller & Bernard Ruffieux, 2011. "Do price-tags influence consumers’ willingness to pay? On the external validity of using auctions for measuring value," Experimental Economics, Springer, vol. 14(2), pages 181-202, May.
  2. Veronika Andorfer & Ulf Liebe, 2012. "Research on Fair Trade Consumption—A Review," Journal of Business Ethics, Springer, vol. 106(4), pages 415-435, April.
  3. Thuriane Mahé, 2010. "Are Stated Preferences Confirmed by Purchasing Behaviours? The Case of Fair Trade-Certified Bananas in Switzerland," Journal of Business Ethics, Springer, vol. 92(2), pages 301-315, April.
  4. Marette Stéphan & Roosen Jutta & Blanchemanche Sandrine, 2011. "The Combination of Lab and Field Experiments for Benefit-Cost Analysis," Journal of Benefit-Cost Analysis, De Gruyter, vol. 2(3), pages 1-36, August.
  5. Anne-Célia Disdier & Stéphan Marette, 2012. "Taxes, minimum-quality standards and/or product labeling to improve environmental quality and welfare: Experiments can provide answers," Journal of Regulatory Economics, Springer, vol. 41(3), pages 337-357, June.
  6. Wendler, Cordula & Liebe, Ulf & Ihle, Rico & von Cramon-Taubadel, Stephan, 2012. "The Willingness to Pay of European Consumers for Jointly Produced Israeli – Palestinian Products," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126727, International Association of Agricultural Economists.

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