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Economic techniques to estimate the demand for sustainable products: a case study for fair trade and organic coffee in the United Kingdom

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  • Galarraga, Ibon
  • Markandya, Anil

Abstract

The hedonic approach is used in this paper to estimate how much is paid for the fair trade/organic characteristic of the coffee in the British market. This information is later combined with the Quantity Based Demand System (QBDS) model -developed by the authors- and the Almost Ideal Demand System (AIDS) (Deaton and Muellbauer, 1980) to completely determine the demand function for different coffees. The QBDS model is easier to handle and less data demanding than the AIDS model in this study. Resumen El presente artículo se basa en la utilización del método hedónico para la estimación de la cantidad que se paga por la característica de "Orgánico/Comercio Justo" del café en el mercado británico. La información obtenida se combina después con el modelo Sistema de Demanda Basado en Cantidades (QBDS) - desarrollado por los autores- y el Sistema de Demanda Casi Ideal (AIDS) (Deaton and Muellbauer, 1980) para determinar por completo la función de demanda de los diferentes tipos de café. El modelo QBDS es más sencillo en su utilización y necesita de menos datos que el modelo AIDS. Palabras clave: sistemas de demanda, método hedónico, demanda de café, etiquetado

Suggested Citation

  • Galarraga, Ibon & Markandya, Anil, 2004. "Economic techniques to estimate the demand for sustainable products: a case study for fair trade and organic coffee in the United Kingdom," Economia Agraria y Recursos Naturales, Spanish Association of Agricultural Economists, vol. 4(07).
  • Handle: RePEc:ags:earnsa:28732
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    References listed on IDEAS

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    8. Ibon Galarraga & Anil Markandya, 2003. "The analysis of welfare effects of an environmental product tax: an application to the taxation of car tyres in Hungary," Fiscal Studies, Institute for Fiscal Studies, vol. 24(1), pages 97-114, March.
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    Citations

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    Cited by:

    1. Aditi Sengupta, 2010. "Signaling environmental quality to green consumers and the incentive to invest in cleaner technology: Effect of environmental regulation," Departmental Working Papers 1001, Southern Methodist University, Department of Economics.
    2. Wang, Xiaojin, 2016. "Is Fair Trade Fair for Consumers? A Hedonic Analysis of U.S. Retail Fair Trade Coffee Prices," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 236344, Agricultural and Applied Economics Association.
    3. Sengupta, Aditi, 2012. "Investment in cleaner technology and signaling distortions in a market with green consumers," Journal of Environmental Economics and Management, Elsevier, vol. 64(3), pages 468-480.
    4. Galarraga, Ibon & Markandya, Anil, 2006. "A proposal to correct external effects in the coffee market: a tax on regular coffee and tea to subsidise the fair trade coffee," Economia Agraria y Recursos Naturales, Spanish Association of Agricultural Economists, vol. 6(12).
    5. Sabyasachi Das, 2016. "Certification Under Oligopolistic Competition," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 65(1), pages 251-271, September.
    6. Miret-Pastor, Lluís & Peiró-Signes, Ángel & Segarra-Oña, Maria-del-Val & Herrera-Racionero, Paloma, 2014. "Empirical analysis of sustainable fisheries and the relation to economic performance enhancement: The case of the Spanish fishing industry," Marine Policy, Elsevier, vol. 46(C), pages 105-110.
    7. Moritz Bosbach & Ornella Wanda Maietta, 2018. "The Implicit Price for Fair Trade Coffee: Does Social Capital Matter?," CSEF Working Papers 492, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    8. Yang, Shang-Ho & Hu, Wuyang & Mupandawana, Malvern & Liu, Yun, 2012. "Consumer Willingness to Pay for Fair Trade Coffee: A Chinese Case Study," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 44(01), February.
    9. Ibon Galarraga & David Heres Del Valle & Mikel González-Eguino, 2011. "Price Premium for High-Efficiency Refrigerators and Calculation of Price-Elasticities for Close-Substitutes: Combining Hedonic Pricing and Demand Systems," Working Papers 2011-07, BC3.
    10. Veronika Andorfer & Ulf Liebe, 2012. "Research on Fair Trade Consumption—A Review," Journal of Business Ethics, Springer, vol. 106(4), pages 415-435, April.
    11. Achabou, Mohamed Akli & Dekhili, Sihem, 2013. "Luxury and sustainable development: Is there a match?," Journal of Business Research, Elsevier, vol. 66(10), pages 1896-1903.
    12. Rommel Salvador & Altaf Merchant & Elizabeth Alexander, 2014. "Faith and Fair Trade: The Moderating Role of Contextual Religious Salience," Journal of Business Ethics, Springer, vol. 121(3), pages 353-371, May.
    13. Galarraga, Ibon & González-Eguino, Mikel & Markandya, Anil, 2011. "Willingness to pay and price elasticities of demand for energy-efficient appliances: Combining the hedonic approach and demand systems," Energy Economics, Elsevier, vol. 33(S1), pages 66-74.
    14. repec:eee:jouret:v:90:y:2014:i:2:p:255-274 is not listed on IDEAS
    15. Günter Schamel, 2007. "Auction markets for specialty food products with geographical indications," Agricultural Economics, International Association of Agricultural Economists, vol. 37(2-3), pages 257-264, September.
    16. Aditi Sengupta, 2016. "Green Premium, Ecolabel, and Environmental Damage," Auburn Economics Working Paper Series auwp2016-16, Department of Economics, Auburn University.
    17. Schollenberg, Linda, 2011. "So how much do you pay for ethical consumption? Estimating the hedonic price for Fair Trade coffee in Sweden," HUI Working Papers 31, HUI Research.
    18. Yang, Shang-Ho & Hu, Wuyang, 2011. "Using a Modified Payment Card Survey on Chinese Consumers’ Willingness to Pay for Fair Trade Coffee: Would the Starting Point Matter," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103720, Agricultural and Applied Economics Association.
    19. Akaichi, Faical & Grauw, Steven de & Darmon, Paul, 2015. "Are Fair Trade, Carbon Footprint and Organic Attributes competing? Some Evidences from Scotland, Netherland and France," 2015 Conference, August 9-14, 2015, Milan, Italy 210940, International Association of Agricultural Economists.

    More about this item

    Keywords

    demand systems; hedonic method; coffee demand; labelling; C13; C21; D12;

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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