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Got Organic Milk? Consumer Valuations of Milk Labels after the Implementation of the USDA Organic Seal

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  • Kiesel, Kristin
  • Villas-Boas, Sofia B

Abstract

This paper investigates consumer reactions to changes in information provision regarding organic production. Quantitative analyses focus on the actual implementation of mandatory labeling guidelines under the National Organic Program. The unique nature of the fluid milk market in combination with these regulatory changes allows us to place a value on information sets under different labeling regimes. Hedonic price functions provide an initial reference point for analyses of individual responses. A random utility discrete choice model serves as the primary econometric specification and allows consideration of consumer preference heterogeneity along observable household demographics. Our results indicate that the USDA organic seal increases the probability of purchasing organic milk. An initial hedonic price function approach, as well as simulations within the discrete choice framework, suggests that consumers value the change in labeling regulations with regard to organic production. Our results further suggest that consumers substitute away from milk carrying the rBGH-free label. This may indicate that consumers pay less attention to these labels in the time period investigated compared to results found in studies that use earlier time periods.

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Bibliographic Info

Paper provided by Department of Agricultural & Resource Economics, UC Berkeley in its series Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series with number qt9sx3j5hv.

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Date of creation: 15 Mar 2007
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Handle: RePEc:cdl:agrebk:qt9sx3j5hv

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Related research

Keywords: consumers' preferences; food labeling; milk; natural foods;

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References

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Citations

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  1. repec:ags:jrapmc:122316 is not listed on IDEAS
  2. Matsdotter, Elina & Elofsson, Katarina & Arntyr, Johan, 2014. "Got green milk? A field experimental trial of consumer demand for a climate label," Working Paper Series 2014:2, Department Economics, Swedish University of Agricultural Sciences.
  3. Rohlfs, Chris & Sullivan, Ryan & Kniesner, Thomas J., 2013. "Hedonic Estimation under Very General Conditions Using Experimental and Quasi-Experimental Designs," IZA Discussion Papers 7554, Institute for the Study of Labor (IZA).
  4. Hallstein, Eric & Villas-Boas, Sofia B., 2013. "Can household consumers save the wild fish? Lessons from a sustainable seafood advisory," Journal of Environmental Economics and Management, Elsevier, vol. 66(1), pages 52-71.
  5. Gillespie, Jeffrey M. & Nehring, Richard F. & Hallahan, Charles B. & Morrison Paul, Catherine J. & Sandretto, Carmen L., 2008. "Economics and Productivity of Organic versus Non-organic Dairy Farms in the United States," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44415, European Association of Agricultural Economists.
  6. Kiesel, Kristin, 2012. "“A Definition at Last, But What Does it All Mean?†Newspaper Coverage of Organic Food Production and its Effects on Milk Purchases," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 37(1), April.
  7. Kiesel, Kristin & Villas-Boas, Sofia B., 2009. "Can Information Costs Confuse Consumer Choice?---Nutritional Labels in a Supermarket Experiment," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt6st6d0rr, Department of Agricultural & Resource Economics, UC Berkeley.
  8. Bonnet, Céline & Bouamra-Mechemache, Zohra, 2014. "Organic label, bargaining power, and profit sharing in the French fluid milk market," TSE Working Papers 14-493, Toulouse School of Economics (TSE).
  9. Matthew Rousu & Jay Corrigan, 2008. "Estimating the value consumers derive from product labeling," Framed Field Experiments 00192, The Field Experiments Website.
  10. Costanigro, Marco & Kroll, Stephan & Thilmany, Dawn D. & Bunning, Marisa, 2010. "Do Taste Buds Trump Labels and Information? A Sensory Test and Economic Experiment on Organic and Local Apples," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61668, Agricultural and Applied Economics Association.
  11. Hallstein, Eric & Villas-Boas, Sofia B, 2009. "Are Consumers Color Blind? : An empirical investigation of a traffic light advisory for sustainable seafood," CUDARE Working Paper Series 1088, University of California at Berkeley, Department of Agricultural and Resource Economics and Policy.

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