Although methods such as contingent valuation have received a great deal of attention in environmental valuation literature, fewer studies have reported willingness-to-pay estimates with agribusiness applications. Because agribusinesses are increasingly interested in producing and selling differentiated goods and services whose values has not been established by well-functioning markets, we provide a short introduction to willingnessto-pay methodology and provide a discussion of several different methods used to estimate willingness-to-pay. More specifically, we discuss how much of the work in environmental and experimental valuation literature can be extended to agribusiness applications, which have their own set of unique issues. M any producer groups and agribusinesses are interested in "adding value" to their products by differentiating generic agricultural commodities or developing alternative products or services with new technologies. 1 However, research and development and new product introductions can be costly. Compounding this are the tens of thousands of new food products introduced annually with success rates often as low as 10%. Thus, market research into the viability of new products and services is critical.When investigating the viability of a new venture, agribusiness firms are generally interested in two factors: production costs and consumer demand for the new product or service. These factors are often the primary determinants of product adoption and pricing decisions. Although costs are relatively straightforward to estimate, assessing consumer demand for novel products and attributes is often more complex. Because these firms are interested in selling a new product or promoting a novel attribute, secondary data from actual markets are unavailable. To estimate consumer demand, or willingness-to-pay (WTP), for these novel goods
In Latin America, the country of Ecuador was one of the first and most severely affected by the COVID-19 pandemic. This study aimed to evaluate the demand for a COVID-19 vaccine in Ecuador by estimating individuals’ willingness to pay (WTP) for the vaccine, and by assessing the effect of vaccine attributes (duration of protection and efficacy) and individuals’ characteristics on this valuation. The sample used (N = 1,050) was obtained through an online survey conducted from April 2 to April 7, 2020. Two levels of vaccine efficacy (70% and 98%) and two levels of vaccine duration of protection (1 and 20 years) were considered. The willingness to pay estimates were obtained using a double-bounded dichotomous-choice contingent valuation format. Survey results show that a very large proportion of individuals (at least 97%) were willing to accept a COVID-19 vaccine, and at least 85% of individuals were willing to pay a positive amount for that vaccine. Conservative estimates of the average WTP values ranged from USD 147.61 to 196.65 and the median WTP from USD 76.9 to 102.5. Only the duration of protection was found to influence individuals’ WTP for the vaccine ( p < 0.01). On average, respondents were willing to pay 30% more for a COVID-19 vaccine with 20 years of protection relative to the vaccine with 1 year of protection. Regression results show that WTP for the vaccine was associated with income, employment status, the perceived probability of needing hospitalization if contracting the virus causing COVID-19, and region of residence.
Exchange rates have long been thought to have an important impact on the export and import of goods and services, and, thus, exchange rates are expected to influence the price of those products that are traded. At the same time, energy impacts commodity production in some very important ways. The use of chemical and petroleum derived inputs has increased in agriculture over time; the prices of these critical inputs, then, would be expected to alter supply, and, therefore, the prices of commodities using these inputs. Also, agricultural commodities have been increasingly used to produce energy, thereby leading to an expectation of a linkage between energy and commodity markets. In this paper, we examine the price relationship through time of the primary agricultural commodities, exchange rates, and oil prices. Using overlapping time periods, we examine the cointegration relationship between prices to determine changes in the strength of the linkage between markets through time. In general, we find that commodity prices are linked to oil for corn, cotton, and soybeans, but not for wheat, and that exchange rates do play a role in the linkage of prices over time.
Contracting is a contentious issue in agriculture. Competing theories assert that risk or transactions cost drive contracting decisions, with some argument that autonomy also plays a role. We examine preferences for different contract attributes using a choice-based conjoint experiment. Results of a study of agricultural producers show that both risk and transactions cost play a role in contracting decisions. Autonomy also plays a role, especially to the extent that producers wish to avoid total loss of autonomy. These results suggest that the effects of risk and transactions cost are relative and should both be considered when analyzing contracting decisions.
A telephone presurvey is used in conjunction with mail and Internet follow-up surveys to assess self-selection and item nonresponse bias. Findings suggest that self-selection is present, but item nonresponse bias is limited. The Internet version exhibited no item nonresponse bias.
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