Got Organic Milk? Consumer Valuations of Milk Labels after the Implementation of the USDA Organic Seal
This paper investigates consumer reactions to changes in information provision regarding organic production. Quantitative analyses focus on the actual implementation of mandatory labeling guidelines under the National Organic Program. The unique nature of the fluid milk market in combination with these regulatory changes allows us to place a value on information sets under different labeling regimes. Hedonic price functions provide an initial reference point for analyses of individual responses. A random utility discrete choice model serves as the primary econometric specification and allows consideration of consumer preference heterogeneity along observable household demographics. Our results indicate that the USDA organic seal increases the probability of purchasing organic milk. An initial hedonic price function approach, as well as simulations within the discrete choice framework, suggests that consumers value the change in labeling regulations with regard to organic production. Our results further suggest that consumers substitute away from milk carrying the rBGH-free label. This may indicate that consumers pay less attention to these labels in the time period investigated compared to results found in studies that use earlier time periods.
|Date of creation:||15 Mar 2007|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (510) 642-3345
Fax: (510) 643-8911
Web page: http://www.escholarship.org/repec/are_ucb/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Aviv Nevo, 2001.
"New Products, Quality Changes and Welfare Measures Computed From Estimated Demand Systems,"
NBER Working Papers
8425, National Bureau of Economic Research, Inc.
- Aviv Nevo, 2003. "New Products, Quality Changes, and Welfare Measures Computed from Estimated Demand Systems," The Review of Economics and Statistics, MIT Press, vol. 85(2), pages 266-275, May.
- Teisl, Mario F. & Roe, Brian & Hicks, Robert L., 2002. "Can Eco-Labels Tune a Market? Evidence from Dolphin-Safe Labeling," Journal of Environmental Economics and Management, Elsevier, vol. 43(3), pages 339-359, May.
- Small, Kenneth A & Rosen, Harvey S, 1981.
"Applied Welfare Economics with Discrete Choice Models,"
Econometric Society, vol. 49(1), pages 105-30, January.
- Harvey S. Rosen & Kenneth A. Small, 1979. "Applied Welfare Economics with Discrete Choice Models," NBER Working Papers 0319, National Bureau of Economic Research, Inc.
- Misra, Sukant K. & Clem, Kyle D., 1998. "Demand for Milk Produced With and Without Recombinant Bovine Somatotropin," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 16(2).
- Roe, Brian E. & Teisl, Mario F., 1998. "The Economics Of Labeling: An Overview Of Issues For Health And Environmental Disclosure," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 27(2), October.
- Marks, Leonie A. & Kalaitzandonakes, Nicholas G. & Vickner, Steven S., 2003. "Evaluating Consumer Response to GM Foods: Some Methodological Considerations," CAFRI: Current Agriculture, Food and Resource Issues, Canadian Agricultural Economics Society, issue 04.
- Sofia Berto Villas-Boas, 2007.
"Vertical Relationships between Manufacturers and Retailers: Inference with Limited Data,"
Review of Economic Studies,
Oxford University Press, vol. 74(2), pages 625-652.
- Villas-Boas, Sofia B., 2006. "Vertical relationships between manufacturers and retailers: inference with limited data," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt0z26d2v9, Department of Agricultural & Resource Economics, UC Berkeley.
- Villas-Boas, Sofia B., 2007. "Vertical relationships between manufacturers and retailers: inference with limited data," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt6gz1t778, Department of Agricultural & Resource Economics, UC Berkeley.
- Huffman, Wallace E. & Shogren, Jason F. & Rousu, Matthew C. & Tegene, Abebayehu, 2003.
"Consumer Willingness to Pay for Genetically Modified Food Labels in a Market with Diverse Information: Evidence from Experimental Auctions,"
Journal of Agricultural and Resource Economics,
Western Agricultural Economics Association, vol. 28(03), December.
- Huffman, Wallace & Shogren, J. E. & Rousu, M. & Tegene, Abebayehu, 2003. "Consumer Willingness to Pay for Genetically Modified Food Labels in a Market with Diverse Information: Evidence from Experimental Auctions," Staff General Research Papers 12256, Iowa State University, Department of Economics.
- Jason Shogren, 2006. "Valuation in the Lab," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 34(1), pages 163-172, 05.
- Kim, Donghun, 2004. "Estimation of the Effects of New Brands on Incumbents' Profits and Consumer Welfare: The U.S. Processed Cheese Market Case," Research Reports 25192, University of Connecticut, Food Marketing Policy Center.
- Ippolito, Pauline M & Mathios, Alan D, 1995. "Information and Advertising: The Case of Fat Consumption in the United States," American Economic Review, American Economic Association, vol. 85(2), pages 91-95, May.
- G. Cornelis van Kooten & Emina Krcmar & Erwin H. Bulte, 2001. "Preference Uncertainty in Non-Market Valuation: A Fuzzy Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(3), pages 487-500.
- Golan, Elise H. & Kuchler, Fred & Mitchell, Lorraine, 2000. "Economics Of Food Labeling," Agricultural Economics Reports 34069, United States Department of Agriculture, Economic Research Service.
- Eliza M. Mojduszka & Julie A. Caswell, 2000. "A Test of Nutritional Quality Signaling in Food Markets Prior to Implementation of Mandatory Labeling," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 298-309.
- David Buschena & Vincent Smith, 2005. "Do Voluntary Biotechnology Labels Matter to the Consumer? Evidence from the Fluid Milk Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(2), pages 378-392.
- Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
- Rivers, Douglas & Vuong, Quang H., 1988. "Limited information estimators and exogeneity tests for simultaneous probit models," Journal of Econometrics, Elsevier, vol. 39(3), pages 347-366, November.
- Mathios, Alan D, 2000. "The Impact of Mandatory Disclosure Laws on Product Choices: An Analysis of the Salad Dressing Market," Journal of Law and Economics, University of Chicago Press, vol. 43(2), pages 651-77, October.
- Daniel McFadden & Kenneth Train, 2000. "Mixed MNL models for discrete response," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(5), pages 447-470.
- Kenneth Y. Chay & Michael Greenstone, 1998.
"Does Air Quality Matter? Evidence from the Housing Market,"
NBER Working Papers
6826, National Bureau of Economic Research, Inc.
- Kenneth Y. Chay & Michael Greenstone, 2005. "Does Air Quality Matter? Evidence from the Housing Market," Journal of Political Economy, University of Chicago Press, vol. 113(2), pages 376-424, April.
- Swait, Joffre & Adamowicz, Wiktor & Bueren, Martin van, 2004. "Choice and temporal welfare impacts: incorporating history into discrete choice models," Journal of Environmental Economics and Management, Elsevier, vol. 47(1), pages 94-116, January.
- E. DuPuis, 2000. "Not in my body: BGH and the rise of organic milk," Agriculture and Human Values, Springer, vol. 17(3), pages 285-295, September.
- Roe, Brian & Teisl, Mario F., 2007. "Genetically modified food labeling: The impacts of message and messenger on consumer perceptions of labels and products," Food Policy, Elsevier, vol. 32(1), pages 49-66, February.
- Hausman, Jerry A & Leonard, Gregory K, 2002. "The Competitive Effects of a New Product Introduction: A Case Study," Journal of Industrial Economics, Wiley Blackwell, vol. 50(3), pages 237-63, September.
- Glaser, Lewrene K. & Thompson, Gary D., 2000. "Demand For Organic And Conventional Beverage Milk," 2000 Annual Meeting, June 29-July 1, 2000, Vancouver, British Columbia 36346, Western Agricultural Economics Association.
- J. Miguel Villas-Boas & Russell S. Winer, 1999. "Endogeneity in Brand Choice Models," Management Science, INFORMS, vol. 45(10), pages 1324-1338, October.
When requesting a correction, please mention this item's handle: RePEc:cdl:agrebk:qt9sx3j5hv. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Lisa Schiff)
If references are entirely missing, you can add them using this form.