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So how much do you pay for ethical consumption? Estimating the hedonic price for Fair Trade coffee in Sweden

Author

Listed:
  • Schollenberg, Linda

    (Hanken School of Economics)

Abstract

This study applies the method of hedonic pricing to estimate the impact of the Fair Trade-label on the market for coffee in Sweden. Over the past decades, the general public interest in products bearing some environmental or social responsibility label has grown considerably in the EU, and Sweden is one of the countries where public awareness of labelling issues is particularly high. The sale of labelled products in regular supermarkets has increased significantly in Sweden but despite growing supply and acceptance, a lot remains to be understood about the market. This study takes a revealed preference approach using weekly scanner sales panel data recently made available by Nielsen and the Swedish Retail Institute (HUI). A representative sample of grocery stores all over Sweden is covered, as well as all major brands supplying roasted coffee. Hedonic estimates are obtained for what consumers pay for different characteristics as accessible from the package. Results point to a considerable premium of 38% paid for Fair Trade coffee, underlining high public awareness reflected in the retailers’ pricing policy.

Suggested Citation

  • Schollenberg, Linda, 2011. "So how much do you pay for ethical consumption? Estimating the hedonic price for Fair Trade coffee in Sweden," HUI Working Papers 31, HUI Research.
  • Handle: RePEc:hhs:huiwps:0031
    as

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    References listed on IDEAS

    as
    1. Chris Arnot & Peter C. Boxall & Sean B. Cash, 2006. "Do Ethical Consumers Care About Price? A Revealed Preference Analysis of Fair Trade Coffee Purchases," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 54(4), pages 555-565, December.
    2. Torsten Steinrücken & Sebastian Jaenichen, 2007. "The Fair Trade Idea: Towards an Economics of Social Labels," Journal of Consumer Policy, Springer, vol. 30(3), pages 201-217, September.
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    4. G¸nter Schamel & Kym Anderson, 2003. "Wine Quality and Varietal, Regional and Winery Reputations: Hedonic Prices for Australia and New Zealand," The Economic Record, The Economic Society of Australia, vol. 79(246), pages 357-369, September.
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    12. repec:feb:natura:0061 is not listed on IDEAS
    13. Sarah Lyon, 2007. "Fair Trade Coffee and Human Rights in Guatemala," Journal of Consumer Policy, Springer, vol. 30(3), pages 241-261, September.
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    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Fair Trade; coffee; eco-labels; hedonic pricing; ethical consumption;

    JEL classification:

    • J80 - Labor and Demographic Economics - - Labor Standards - - - General
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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