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Household Willingness to Pay for Organic Products

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  • Griffith, Rachel
  • Nesheim, Lars

Abstract

We use hedonic prices and purchase quantities to consider what can be learned about household willingness to pay for baskets of organic products and how this varies across households. We use rich scanner data on food purchases by a large number of households to compute household specific lower and upper bounds on willingness to pay for various baskets of organic products. These bounds provide information about willingness to pay for organic without imposing restrictive assumptions on preferences. We show that the reasons households are willing to pay vary, with quality being the most important, health concerns coming second, and environmental concerns lagging far behind. We also show how these methods can be used for example by stores to provide robust upper bounds on the revenue implication of introducing a new line of organic products.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6905.

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Date of creation: Jul 2008
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Handle: RePEc:cpr:ceprdp:6905

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Keywords: hedonic prices; organic; willingness to pay;

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References

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Cited by:
  1. James J. Heckman & Rosa L. Matzkin & Lars Nesheim, 2010. "Nonparametric Identification and Estimation of Nonadditive Hedonic Models," Econometrica, Econometric Society, vol. 78(5), pages 1569-1591, 09.
  2. Denver, Sigrid & Christensen, Tove, 2010. "Is Organic Food A Quality Attribute Or A Product Category?," 115th Joint EAAE/AAEA Seminar, September 15-17, 2010, Freising-Weihenstephan, Germany 116389, European Association of Agricultural Economists & Agricultural and Applied Economics Association.
  3. Satimanon, Thasanee & Weatherspoon, Dave D., 2010. "Hedonic Analysis of Sustainable Food Products," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IAMA), vol. 13(4).

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