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Assessing Consumers’ Willingness To Pay For Different Units Of Organic Milk: Evidence From Multi-Unit Auctions

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  • Akaichi, Faiçal
  • Gil, Jose Maria
  • Nayga, Rodolfo M., Jr.

Abstract

Experimental auctions are normally conducted using single-unit auctions. In this paper, we explore the use of multi-unit auctions to investigate the determinants of consumers’ willingness to pay (WTP) for a food product (i.e., organic milk) in a multi-unit shopping scenario. We also analyze the effect of positive and negative information about organic farming on WTP. Our results suggest that although consumers are willing to pay for organic milk, their WTP decreases with the number of purchased units. We also found that the magnitude and the statistical significance of the determinants of WTP change from one unit to another. The most important factors affecting WTP are the number of units subjects are willing to buy, health concerns, and perceived animal welfare benefits of organic production. The type of information provided also plays a relevant role. Specifically, we find that positive information on organic farming increases WTP, negative information decreases WTP, and provision of both positive and negative information does not affect WTP.

Suggested Citation

  • Akaichi, Faiçal & Gil, Jose Maria & Nayga, Rodolfo M., Jr., 2009. "Assessing Consumers’ Willingness To Pay For Different Units Of Organic Milk: Evidence From Multi-Unit Auctions," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 60982, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea10:60982
    DOI: 10.22004/ag.econ.60982
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    References listed on IDEAS

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    1. Richard Engelbrecht-Wiggans & Charles M. Kahn, 1998. "Multi-unit auctions with uniform prices," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 12(2), pages 227-258.
    2. Roitner-Schobesberger, Birgit & Darnhofer, Ika & Somsook, Suthichai & Vogl, Christian R., 2008. "Consumer perceptions of organic foods in Bangkok, Thailand," Food Policy, Elsevier, vol. 33(2), pages 112-121, April.
    3. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
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    Keywords

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    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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