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Global social preferences and the demand for socially responsible products: empirical evidence from a pilot study on fair trade consumers

  • Leonardo Becchetti

    ()

    (University of Rome Tor Vergata)

  • Furio Rosati

    ()

    (University of Rome Tor Vergata)

We analyze behaviour and motivations of a sample of about one thousand consumers purchasing “fair trade (FT) goods”, i. e. food and artisan goods which include socially responsible (SR) characteristics and a price premium for primary product producers with respect to equivalent non FT products. By estimating a simultaneous two-equation treatment effect model we find that FT products have less than unit income elasticity and their demand is negatively (positively) correlated with geographical distance from the nearest shop (age and awareness of SR criteria). Awareness of SR criteria depends, in turn, on a series of factors (consumption habits, membership of volunteer associations) which, indirectly (via increased awareness), significantly affect consumption. We also measure consumers’ willingness to pay in excess for the SR features of FT products with a contingent evaluation approach and find that it is positively correlated with awareness of SR criteria.

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Paper provided by Tor Vergata University, CEIS in its series CEIS Research Paper with number 90.

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Length: 34
Date of creation: 20 Feb 2007
Date of revision:
Handle: RePEc:rtv:ceisrp:90
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  1. Ernst Fehr & Armin Falk, . "Psychological Foundations of Incentives," IEW - Working Papers 095, Institute for Empirical Research in Economics - University of Zurich.
  2. Katherine Terrell & Fatma El Hamidi, 2001. "The Impact of Minimum Wages on Wage Inequality and Employment in the Formal and Informal Sector in Costa Rica," William Davidson Institute Working Papers Series 479, William Davidson Institute at the University of Michigan.
  3. Joel Sobel, 2002. "Can We Trust Social Capital?," Journal of Economic Literature, American Economic Association, vol. 40(1), pages 139-154, March.
  4. Carson Richard T. & Mitchell Robert Cameron, 1995. "Sequencing and Nesting in Contingent Valuation Surveys," Journal of Environmental Economics and Management, Elsevier, vol. 28(2), pages 155-173, March.
  5. Peter A. Diamond & Jerry A. Hausman, 1994. "Contingent Valuation: Is Some Number Better than No Number?," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 45-64, Fall.
  6. José Márcio Camargo, 1984. "Minimum wage in Brazil theory, policy and empirical evidence," Textos para discussão 67, Department of Economics PUC-Rio (Brazil).
  7. Kahneman, Daniel & Knetsch, Jack L., 1992. "Valuing public goods: The purchase of moral satisfaction," Journal of Environmental Economics and Management, Elsevier, vol. 22(1), pages 57-70, January.
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