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The Value of Collective Reputation for Environmentally Friendly Production Methods: The Case of Val di Gresta

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Abstract

This paper investigates preferences for various environment-friendly production systems using 1949 choices from a sample of 240 respondents that chose amongst different types of carrots. The and multi-attribute stated-preference data collection was based on an experimental designed tailored to identify interaction effects between production methods and place of origin we estimate the effect of collective reputations for growers of an Alpine valley known to be completely dedicated to organic production. The implied WTP distributions are positve for organic and integrated pest management and provide evidence of recognition of a collective reputation for environmentally friendly production methods. Marginal utility of income is found to be systematically linked to socio-economic covariates, while unobserved heterogeneity is found for organic and bio-dynamic production methods and for place of origin, but not for integrated pest management. WTP for organic produce from Val di Gresta is found to be around 1-2 euro/kg depending on budget constraints, and not statistically significant for bio-dynamic production. The study confirms the existence of the growers' reputation for EFPMs and provides an empirical estimate of the premium the market awards to such a reputation.

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File URL: ftp://mngt.waikato.ac.nz/RePEc/wai/econwp/0711.pdf
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Bibliographic Info

Paper provided by University of Waikato, Department of Economics in its series Working Papers in Economics with number 07/11.

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Length: 24 pages
Date of creation: 07 Sep 2007
Date of revision:
Handle: RePEc:wai:econwp:07/11

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Keywords: Collective reputation; mixed logit; random utility parameters; sustainable agriculture; Choice modeling; Organic methods;

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  1. Zanoli, Raffaele & Naspetti, Simona, 2002. "Consumer motivations in the purchase of organic food. A means-end approach," MPRA Paper 32712, University Library of Munich, Germany.
  2. Brownstone, David & Train, Kenneth, 1999. "Forecasting new product penetration with flexible substitution patterns," University of California Transportation Center, Working Papers qt1j6814b3, University of California Transportation Center.
  3. Swait, Joffre & Adamowicz, Wiktor L., 1999. "Choice Environment, Market Complexity and Consumer Behavior: A Theoretical and Empirical Approach for Incorporating Decision Complexity into Models of Consumer Choice," Staff Paper Series 24093, University of Alberta, Department of Resource Economics and Environmental Sociology.
  4. Roosen, Jutta & Lusk, Jayson L. & Fox, John A., 2001. "Consumer Demand For And Attitudes Toward Alternative Beef Labeling Strategies In France, Germany, And The Uk," 2001 Annual meeting, August 5-8, Chicago, IL 20643, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  5. Cuyno, Leah C. M. & Norton, George W. & Rola, Agnes, 2001. "Economic analysis of environmental benefits of integrated pest management: a Philippine case study," Agricultural Economics, Blackwell, vol. 25(2-3), pages 227-233, September.
  6. Kenneth Train, 2003. "Discrete Choice Methods with Simulation," Online economics textbooks, SUNY-Oswego, Department of Economics, number emetr2, Spring.
  7. Ramu Govindasamy & John Italia, 1998. "A willingness-to-purchase comparison of integrated pest management and conventional produce," Agribusiness, John Wiley & Sons, Ltd., vol. 14(5), pages 403-414.
  8. Ricardo Scarpa & Mara Thiene & Kenneth Train, 2006. "Utility in WTP Space: A Tool to Address Confounding Random Scale Effects in Destination Choice to the Alps," Working Papers in Economics 06/15, University of Waikato, Department of Economics.
  9. Frode Alfnes, 2004. "Stated preferences for imported and hormone-treated beef: application of a mixed logit model," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 31(1), pages 19-37, March.
  10. Ferrini, Silvia & Scarpa, Riccardo, 2007. "Designs with a priori information for nonmarket valuation with choice experiments: A Monte Carlo study," Journal of Environmental Economics and Management, Elsevier, vol. 53(3), pages 342-363, May.
  11. Anders Karlstrom, 2003. "A Simple Method of Incorporating Income Effects into Logit and Nested-Logit Models: Theory and Application," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(1), pages 248-253.
  12. Maria Luz Loureiro & Jill J. McCluskey, 2000. "Assessing consumer response to protected geographical identification labeling," Agribusiness, John Wiley & Sons, Ltd., vol. 16(3), pages 309-320.
  13. Jason A. Winfree & Jill J. McCluskey, 2005. "Collective Reputation and Quality," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(1), pages 206-213.
  14. Scarpa, Riccardo & Ruto, Eric S. K. & Kristjanson, Patti & Radeny, Maren & Drucker, Adam G. & Rege, John E. O., 2003. "Valuing indigenous cattle breeds in Kenya: an empirical comparison of stated and revealed preference value estimates," Ecological Economics, Elsevier, vol. 45(3), pages 409-426, July.
  15. DeShazo, J. R. & Fermo, German, 2002. "Designing Choice Sets for Stated Preference Methods: The Effects of Complexity on Choice Consistency," Journal of Environmental Economics and Management, Elsevier, vol. 44(1), pages 123-143, July.
  16. Eliza M. Mojduszka & Julie A. Caswell & J. Michael Harris, 2001. "Consumer choice of food products and the implications for price competition and government policy," Agribusiness, John Wiley & Sons, Ltd., vol. 17(1), pages 81-104.
  17. Jayson L. Lusk & F. Bailey Norwood, 2005. "Effect of Experimental Design on Choice-Based Conjoint Valuation Estimates," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(3), pages 771-785.
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Cited by:
  1. Giergiczny, Marek & Valasiuk, Sviataslau & Czajkowski, Mikolaj & De Salvo, Maria & Signorello, Giovanni, 2012. "Including cost income ratio into utility function as a way of dealing with ‘exploding’ implicit prices in mixed logit models," Journal of Forest Economics, Elsevier, vol. 18(4), pages 370-380.
  2. Janssen, Meike & Hamm, Ulrich, 2011. "Certification Logos in the Market for Organic Food: What are Consumers Willing to Pay for Different Logos?," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114454, European Association of Agricultural Economists.
  3. Crastes, Romain & Beaumais, Olivier & Arkoun, Ouerdia & Laroutis, Dimitri & Mahieu, Pierre-Alexandre & Rulleau, Bénédicte & Hassani-Taibi, Salima & Barbu, Vladimir Stefan & Gaillard, David, 2014. "Erosive runoff events in the European Union: Using discrete choice experiment to assess the benefits of integrated management policies when preferences are heterogeneous," Ecological Economics, Elsevier, vol. 102(C), pages 105-112.

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