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Willingness-To-Pay for Food of the Own Region: Empirical Estimates from Hypothetical and Incentive Compatible Settings

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  • Burchardi, Henrike
  • Schroeder, Carsten
  • Thiele, Holger D.

Abstract

The ongoing liberalisation of the European food market provides incentives to producers to seek for innovative strategies of product differentiation. One possibility to differentiate the own product from competing ones is its region-of-origin. In this paper, we investigate consumers'’ willingness-to-pay and underlying preferences for food of the own region. We consider fresh milk as an example. Underlying data stem from a hypothetical contingent valuation and from an incentive compatible experimental setting with real payoffs. We find that consumers perceive fresh milk from local farmers as a trustful, high quality product, and that consumers are interested in supporting local producers. Given that price premiums are small, both methods suggest a substantial demand for local products. However, compared to contingent-valuation estimates, the inclusion of real payoffs leads to a significant decrease in the willingness-to-pay stated. This decrease can mainly be assigned to “"pretending altruists”": free riding subjects who respond according to social norms as long as no costs are involved.

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Bibliographic Info

Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2005 Annual meeting, July 24-27, Providence, RI with number 19365.

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Date of creation: 2005
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Handle: RePEc:ags:aaea05:19365

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Keywords: Consumer/Household Economics;

References

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  1. John A. List, 2001. "Do Explicit Warnings Eliminate the Hypothetical Bias in Elicitation Procedures? Evidence from Field Auctions for Sportscards," American Economic Review, American Economic Association, vol. 91(5), pages 1498-1507, December.
  2. Cummings, Ronald G & Harrison, Glenn W & Rutstrom, E Elisabet, 1995. "Homegrown Values and Hypothetical Surveys: Is the Dichotomous Choice Approach Incentive-Compatible?," American Economic Review, American Economic Association, vol. 85(1), pages 260-66, March.
  3. Lusk, Jayson L., 2002. "Effects Of Cheap Talk On Consumer Willingness-To-Pay For Golden Rice," 2002 Annual meeting, July 28-31, Long Beach, CA 19597, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  4. John List & Craig Gallet, 2001. "What Experimental Protocol Influence Disparities Between Actual and Hypothetical Stated Values?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 20(3), pages 241-254, November.
  5. Magnus Johannesson & Bengt Liljas & Per-Olov Johansson, 1998. "An experimental comparison of dichotomous choice contingent valuation questions and real purchase decisions," Applied Economics, Taylor & Francis Journals, vol. 30(5), pages 643-647.
  6. Glenn Harrison & John List, 2004. "Field experiments," Artefactual Field Experiments 00058, The Field Experiments Website.
  7. Cornes, Richard & Sandler, Todd, 1994. "The comparative static properties of the impure public good model," Journal of Public Economics, Elsevier, vol. 54(3), pages 403-421, July.
  8. John Loomis & Thomas Brown & Beatrice Lucero & George Peterson, 1997. "Evaluating the Validity of the Dichotomous Choice Question Format in Contingent Valuation," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 10(2), pages 109-123, September.
  9. Andrew A. Goett & Kathleen Hudson & Kenneth E. Train, 2000. "Customers' Choice Among Retail Energy Suppliers: The Willingness-to-Pay for Service Attributes," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 1-28.
  10. Helen R. Neill & Ronald G. Cummings & Philip T. Ganderton & Glenn W. Harrison & Thomas McGuckin, 1994. "Hypothetical Surveys and Real Economic Commitments," Land Economics, University of Wisconsin Press, vol. 70(2), pages 145-154.
  11. Cornes, Richard & Sandler, Todd, 1984. "Easy Riders, Joint Production, and Public Goods," Economic Journal, Royal Economic Society, vol. 94(375), pages 580-98, September.
  12. Laura O. Taylor & Ronald G. Cummings, 1999. "Unbiased Value Estimates for Environmental Goods: A Cheap Talk Design for the Contingent Valuation Method," American Economic Review, American Economic Association, vol. 89(3), pages 649-665, June.
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Cited by:
  1. Lefèvre, Mélanie, 2014. "Do Consumers Pay More for What They Value More? The Case of Local Milk-based Dairy Products in Senegal," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 43(1), April.
  2. Melanie Lefevre, 2011. "Willingness-to-pay for Local Milk-based Dairy Product in Senegal," CREPP Working Papers 1108, Centre de Recherche en Economie Publique et de la Population (CREPP) (Research Center on Public and Population Economics) HEC-Management School, University of Liège.
  3. Ehmke, Mariah D., 2006. "International Differences in Consumer Preferences for Food Country-of-Origin: A Meta-Analysis," 2006 Annual meeting, July 23-26, Long Beach, CA 21193, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  4. Adams, Damian C. & Adams, Alison E., 2008. "Availability, Attitudes and Willingness to Pay for Local Foods: Results of a Preliminary Survey," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6237, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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