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Household Willingness to Pay for Organic Products

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  • Griffith, Rachel
  • Nesheim, Lars

Abstract

We use hedonic prices and purchase quantities to consider what can be learned about household willingness to pay for baskets of organic products and how this varies across households. We use rich scanner data on food purchases by a large number of households to compute household specific lower and upper bounds on willingness to pay for various baskets of organic products. These bounds provide information about willingness to pay for organic without imposing restrictive assumptions on preferences. We show that the reasons households are willing to pay vary, with quality being the most important, health concerns coming second, and environmental concerns lagging far behind. We also show how these methods can be used for example by stores to provide robust upper bounds on the revenue implication of introducing a new line of organic products.

Suggested Citation

  • Griffith, Rachel & Nesheim, Lars, 2008. "Household Willingness to Pay for Organic Products," CEPR Discussion Papers 6905, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:6905
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    Cited by:

    1. James J. Heckman & Rosa L. Matzkin & Lars Nesheim, 2010. "Nonparametric Identification and Estimation of Nonadditive Hedonic Models," Econometrica, Econometric Society, vol. 78(5), pages 1569-1591, September.
    2. Toker Doganoglu & Firat Inceoglu, 2015. "Product Bans May Benefit Consumers: Implications from a New Model Of Vertical Product Differentiation," Journal of Industry, Competition and Trade, Springer, vol. 15(2), pages 155-180, June.
    3. Céline Bonnet & Zohra Bouamra-Mechemache, 2016. "Organic Label, Bargaining Power, and Profit-sharing in the French Fluid Milk Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(1), pages 113-133.
    4. George Atanasoaie, 2012. "Price on the Organic Food Market," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, vol. 12(4), pages 5-16.
    5. Zohra Bouamra-Mechemache & Céline Bonnet, 2013. "Organic label and profits sharing in the French fluid milk market [Label Bio et partage des profits sur le marché du lait liquide en France]," Post-Print hal-02746459, HAL.
    6. Satimanon, Thasanee & Weatherspoon, Dave D., 2010. "Hedonic Analysis of Sustainable Food Products," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 13(4), pages 1-17.
    7. Astrid Matthey & Tim Kasser, 2013. "Values, food and bags: A study of consumption decisions in a laboratory supermarket," Jena Economics Research Papers 2013-007, Friedrich-Schiller-University Jena.
    8. Denver, Sigrid & Christensen, Tove, 2010. "Is Organic Food A Quality Attribute Or A Product Category?," 115th Joint EAAE/AAEA Seminar, September 15-17, 2010, Freising-Weihenstephan, Germany 116389, European Association of Agricultural Economists.
    9. Fang Lyu & Jaewon Choi, 2020. "The Forecasting Sales Volume and Satisfaction of Organic Products through Text Mining on Web Customer Reviews," Sustainability, MDPI, vol. 12(11), pages 1-23, May.
    10. Álvarez, Begoña & Vera-Hernández, Marcos, 2013. "Exploiting subjective information to understand impoverished children's use of health care," Journal of Health Economics, Elsevier, vol. 32(6), pages 1194-1204.
    11. Adelina Gschwandtner & Michael Burton, 2017. "The Willingness to Pay for Organic Attributes in the UK," Studies in Economics 1702, School of Economics, University of Kent.

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    More about this item

    Keywords

    Hedonic prices; Organic; Willingness to pay;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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