Farmers and other producers are responding to consumer concerns about pesticides by creating new marketing opportunities for products grown with environmentally sound practices. The eco-label analyzed in this study is certified by The Food Alliance (TFA), a non-profit third-party certifying organization based in Portland, Oregon. We assess the mean willingness to pay (WTP) for eco-labeled apples using a double-bounded logit model. We conclude that female respondents with children, and strong environmental and food safety concerns are more likely to pay a premium for eco-labeled apples. However, the estimated premium is small (about 5 cents per pound over an initial price of 99 cents), reflecting the overall difficulty with garnering a premium based on "environmentally sound" practices.
Consumers' attitudes toward quality and desire for cultural identification have generated a growing demand for agricultural products that carry a strong identification with a particular geographical region. Many of these products are currently protected by European Legislation. A hedonic approach was used in order to calculate consumers' willingness to pay for fresh meat products that carry the Protected Geographical Identification label, "Galician Veal," in Spain. The results indicate that if this label is present on high quality cuts of meat, one can obtain a premium up to a certain level of quality. The label is not significant for either quality extreme. Implications of these results and recommendations for the industry are discussed.
Firms who sell a regional or specialty product often share a common or collective reputation, which is based on the group's aggregate quality. The dynamic problem of collective reputation is similar to the natural resource extraction problems. Therefore, for the analysis of this particular problem, we use differential games. If there is unrestricted access to a common property resource (the reputation stock), agents perceive its shadow value to be zero and extract too rapidly; i.e, they all "cheat" on quality, "milking" the rents generated by the existence of the resource (reputation stock). We show that when there exists a collective product reputation without firm traceability, the firms will extract too much from the stock of reputation. A firm is said to "extract" reputation from the reputation stock when it sells low-quality products at high prices given by the high past levels of quality. The firm builds on the group's reputation when it provides a product with a quality level which is higher than the expected level of quality. The results from this work support minimum quality standards for producer groups and regional and specialty products. This is in contrast to the findings of previous work. Finally, the implications of these results are discussed as they relate to the case study of Washington apples.
Many economists have estimated hedonic price functions for red and white wine. However, estimating a single hedonic price function imposes the assumption that the implicit prices of the attributes are the same for any red or white wine. We argue that even within these two categories, wines are differentiated, and disregarding this heterogeneity causes an aggregation bias in the estimated implicit prices. By estimating hedonic functions specific to price ranges, we show that the wine market is segmented into several product classes or market segments. We find that a model accounting for the existence of wine classes has greater ability to explain the variability in the data and produces more accurate and interpretable results regarding the implicit prices of the attributes. Copyright 2007 The Agricultural Economics Society.
Demand for healthy, safe, and environmentally friendly food products has been increasing. In response, producers are marketing organic and other quality-differentiated foods, sometimes claiming to have followed sound environmental and animal welfare practices. These products frequently have unobservable quality attributes. If the profit-maximizing producer is able to deceive the consumer with a false claim, then he or she will enjoy a higher price with lower production costs (compared to the full disclosure outcome). The analysis described in this paper shows that repeat-purchase relationships and third-party monitoring are required for high-quality credence goods to be available. Policy implications of this analysis for national organic food standards are discussed.
Stigma is a negative attribute of real estate acquired by environmental contamination and reflected in its value (Elliot-Jones, 1996). Using a model of neighborhood turnover with external economies, we show that both temporary stigma and long-term stigma are possible equilibrium outcomes after the discovery and cleanup of a hazardous waste site. The existence and duration of stigma are examined using hedonic price techniques with data from housing sales prices in Dallas County, Texas. We find that results depend critically on distance from the hazardous waste site. Neighborhood turnover due to changes in the level of poverty also appears likely. © 2003 President and Fellows of Harvard College and the Massachusetts Institute of Technology.
Although households are flooded with information through dozens of TV channels, plenty of newspapers, journals, and radio, the public is said to be poorly informed on many important issues. For example, European consumers oppose genetically modified (GM) foodsdespite scientists and official institutions claiming those products are safe. These reactions are blamed on consumers being poorly informed.There is an extensive literature on imperfect information (see Akerlof, Stiglitz). An important implicit assumption in this literature is that such information problems may be solved by providing more information. The problem is that information provision is assumed to be neutral. However, in reality, most information is not provided by institutions whose objective is to foster the public good, but by organizations who have an internal incentive to select certain information, and certain forms of information, over other information. It is either provided by private sources with their own profitmaximizing objectives or by public sources that may have the formal goal of providing objective information, but administrators and governments may have incentives to bias the information.This issue is particularly relevant for consumers' risk perceptions about GM foods. Over 90% of consumers receive information about food and biotechnology primarily through the popular press and television (Hoban and Kendall). Extensive media coverage of possible risks can lead to decreased demand. For example, Johnson shows how media
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