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Estimating Consumers' Willingness-To-Pay for Country-Of-Origin Labels in Fresh Apples and Tomatoes: A Double-Hurdle Probit Analysis of American Data Using Factor Scores

  • Mabiso, Athur
  • Sterns, James A.
  • House, Lisa
  • Wysocki, Allen F.

Data are collected from primary shoppers in Gainesville Florida, Atlanta Georgia and Lansing Michigan using a Vickrey (fifth-priced sealed bid) experimental auction and a survey questionnaire to provide a sample of 311 observations useable for analysis. The average willingness to pay (WTP) for country of origin labeling (COOL) "Grown in the U.S." in apples and tomatoes are calculated then tested for equivalence to assess if WTP is produce specific. A double-hurdle probit model is then estimated to ascertain the prominent determinants of WTP for COOL. Independent variables include demographics, food safety and factor scores derived from a factor analysis of food quality and food preference variables. Results show that on average consumers are willing to pay $0.49 and $0.48 for COOL in apples and tomatoes respectively with 79% of the consumers willing to pay more than $0.00 for apples labeled "Grown in the U.S." and 72% in the case of tomatoes. Premiums are found to be statistically equivalent suggesting that WTP for COOL is not produce specific. The double hurdle probit estimation finds most independent variables insignificant with the exception of the food quality factor scores and consumer trust levels for information they receive from U.S. government agencies. Location, age and income also turn out to be significant factors in the case of the truncated part of the estimation as do food quality and food safety concerns.

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File URL: http://purl.umn.edu/19418
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Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2005 Annual meeting, July 24-27, Providence, RI with number 19418.

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Date of creation: 2005
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Handle: RePEc:ags:aaea05:19418
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