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Pricing of eco-labels with retailer heterogeneity

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  • Asche, Frank
  • Larsen, Thomas A.
  • Smith, Martin D.
  • Sogn-Grundvåg, Geir
  • Young, James A.

Abstract

Eco-labels are important features of many natural resource and food markets. They certify that a product has some desirable unobserved quality, typically related to a public good such as being sustainably produced. Two issues that have received limited attention are whether pricing varies across different eco-labels that may compete with each other and to what extent different retailers charge different prices. Using a unique data set of salmon prices in eight different United Kingdom retail chains, we investigate these issues by estimating a price-attribute model that includes two eco-labels and one country-of-origin label. Results show substantial variation in the prices of the different eco-labels and that eco-label premiums vary across retail chains. Specifically, salmon certified with the Marine Stewardship Council (MSC) label has a high premium in low-end retail chains but no statistically significant premium in the high-end chains. These findings question the ability of the MSC label to transmit consumer willingness-to-pay for public goods through the supply chain to incentivize sustainable management. In contrast, premiums for organic certification are similar in magnitude across retailer types. In general, failure to account for retailer heterogeneity will over- or under-estimate a label’s premium.

Suggested Citation

  • Asche, Frank & Larsen, Thomas A. & Smith, Martin D. & Sogn-Grundvåg, Geir & Young, James A., 2015. "Pricing of eco-labels with retailer heterogeneity," Food Policy, Elsevier, vol. 53(C), pages 82-93.
  • Handle: RePEc:eee:jfpoli:v:53:y:2015:i:c:p:82-93
    DOI: 10.1016/j.foodpol.2015.04.004
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    References listed on IDEAS

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    Cited by:

    1. Asche, Frank & Misund, Bard & Oglend, Atle, 2015. "The Spot-Forward Relationship in the Atlantic Salmon Market," UiS Working Papers in Economics and Finance 2015/16, University of Stavanger.
    2. Wang, Xiaojin, 2016. "The Value of Country-of-Origin and Wild-Caught Labels: A Hedonic Analysis of Shrimp Retail Prices in the United States," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 230197, Southern Agricultural Economics Association.
    3. repec:gam:jsusta:v:10:y:2018:i:1:p:180-:d:126742 is not listed on IDEAS
    4. Lin, Yu-Hsuan & Kim, KyungJa, 2017. "Willingness to Pay for Government-Certified Agri-Products in South Korea," MPRA Paper 84100, University Library of Munich, Germany.
    5. repec:gam:jsusta:v:10:y:2018:i:5:p:1522-:d:145717 is not listed on IDEAS
    6. repec:ucp:mresec:doi:10.1086/692091 is not listed on IDEAS
    7. Santeramo, Fabio Gaetano & Carlucci, Domenico & De Devitiis, Biagia & Nardone, Gianluca & Viscecchia, Rosaria, 2017. "On consumption patterns in oyster markets: the role of attitudes," MPRA Paper 76789, University Library of Munich, Germany.
    8. Elofsson, Katarina & Bengtsson, Niklas & Matsdotter, Elina & Arntyr, Johan, 2016. "The impact of climate information on milk demand: Evidence from a field experiment," Food Policy, Elsevier, vol. 58(C), pages 14-23.
    9. repec:eee:ecolec:v:142:y:2017:i:c:p:113-119 is not listed on IDEAS
    10. Ankamah-Yeboah, Isaac & Nielsen, Max & Nielsen, Rasmus, 2016. "Price premium of organic salmon in Danish retail sale," Ecological Economics, Elsevier, vol. 122(C), pages 54-60.
    11. Vårdal, Erling & Asche, Frank & Straume, Hans-Martin, 2017. "Perish or prosper: Trade patterns for highly perishable products," 2017 International Congress, August 28-September 1, 2017, Parma, Italy 261278, European Association of Agricultural Economists.
    12. repec:oup:ajagec:v:99:y:2017:i:4:p:1056-1077. is not listed on IDEAS
    13. Carlucci, Domenico & Dedevitiis, Biagia & Nardone, Gianluca & Santeramo, Fabio Gaetano, 2016. "Certification Labels Vs Convenience Formats: What drives the market in aquaculture products?," MPRA Paper 75448, University Library of Munich, Germany.
    14. Kyrre Rickertsen & Frode Alfnes & Pierre Combris & Géraldine Enderli & Sylvie Issanchou & Jason F. Shogren, 2017. "French Consumers' Attitudes and Preferences toward Wild and Farmed Fish," Marine Resource Economics, University of Chicago Press, vol. 32(1), pages 59-81.

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    Keywords

    Seafood; Eco-labels; Salmon;

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