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Are the poor willing to pay a premium for designer labels? a field experiment in Bolivia

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  • Luuk Van Kempen
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    Abstract

    This paper provides an empirical test of whether consumers in developing countries who live under conditions of poverty are prepared to pay a premium for products that feature a designer label, not because these are perceived as being of higher quality but for symbolic reasons. For this purpose a field experiment was conducted among urban, low-income consumers in Bolivia. An incentive-compatible procedure was used to elicit willingness-to-pay for designer brand perfume and an intrinsically equivalent non-branded perfume. After correcting for possible “quality illusion”, we find that poor consumers, as a group, are willing to pay a premium for the designer label as a symbol. This willingness to pay for a designer logo depends on respondents' relative economic situation, education level and the frequency of watching soaps on television.

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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal Oxford Development Studies.

    Volume (Year): 32 (2004)
    Issue (Month): 2 ()
    Pages: 205-224

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    Handle: RePEc:taf:oxdevs:v:32:y:2004:i:2:p:205-224

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    Cited by:
    1. Martin Ravallion & Shaohua Chen, 2011. "Weakly Relative Poverty," The Review of Economics and Statistics, MIT Press, vol. 93(4), pages 1251-1261, November.
    2. Stokburger-Sauer, Nicola E. & Teichmann, Karin, 2013. "Is luxury just a female thing? The role of gender in luxury brand consumption," Journal of Business Research, Elsevier, vol. 66(7), pages 889-896.
    3. Bian, Qin & Forsythe, Sandra, 2012. "Purchase intention for luxury brands: A cross cultural comparison," Journal of Business Research, Elsevier, vol. 65(10), pages 1443-1451.
    4. Truyts, Tom, 2012. "Signaling and indirect taxation," Journal of Public Economics, Elsevier, vol. 96(3), pages 331-340.
    5. Rik Linssen & Luuk Kempen & Gerbert Kraaykamp, 2011. "Subjective Well-being in Rural India: The Curse of Conspicuous Consumption," Social Indicators Research, Springer, vol. 101(1), pages 57-72, March.

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