The Demand for Organic and Conventional Produce in London, UK: A System Approach

Fourmouzi, Vasiliki; Genius, Margarita; Midmore, Peter

doi:10.1111/j.1477-9552.2012.00353.x

Cited by 19 publications

(10 citation statements)

References 27 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…However, the degree to which prices of organic products influence purchase behavior is controversial, i.e., if consumers’ reaction is elastic or inelastic. The majority of studies have found that the demand for organic food is somewhat price elastic (Anders and Moeser, 2008) and in general, more price sensitive than for conventional food (Glaser and Thompson, 2000; Lin et al ., 2009; Alviola and Capps, 2010; Fourmouzi et al ., 2012; Kasteridis and Yen, 2012; Schröck, 2013) which is often attributed to the high-price premiums of organic products and their still minor market share. According to these findings, price reductions of organic food would lead to a revenue increase, as the change in price could be compensated by higher purchase quantities.…”

Section: Literature Reviewmentioning

confidence: 99%

Wine consumers’ reaction to prices, organic production and origins at the point of sale: an analysis of household panel data

Schäufele

Hamm

2018

Renew. Agric. Food Syst.

View full text Add to dashboard Cite

Price premiums are considered as major purchase barriers for organic products and therefore may prevent organic market growth. For wine, however, prices take a double and conflicting effect: they also serve as quality signal for consumers. Therefore, it is of high relevance to examine if price is a major barrier for organic wine as well.Even though many studies already examined price behavior for organic wine through surveys and experiments, it is still to be clarified how consumers’ react to price changes in a real market context. So far, no study analyzed consumer preferences for organic labeled wine in daily shopping situations. Through the analysis of the GfK household panel—a high-frequency data set of extensive population coverage—implications for price setting and price promotions in different market segments can be given.In contrast to previous studies, consumers’ overall price sensitivity was found to be low for organic wine and consumers’ preferred organic over conventional wine. The effect of price as quality cue or purchase barrier and the effect of an organic label on consumers’ behavior varied between price categories. Organic wine was valued highest in the low-price category, whereas no price premium for the organic label was examined in the high-price segment. Price sensitivity was extremely high for organic wine in the low-price segment, while price functioned as quality signal in the premium segment for organic and conventional wine similarly.This study verified previous stated preference studies on organic wine through the analysis of actual purchase data. Moreover, new insights for price setting in different price categories were generated through the examination of a large amount of disaggregated data on single consumer purchases.

show abstract

Section: Literature Reviewmentioning

confidence: 99%

Wine consumers’ reaction to prices, organic production and origins at the point of sale: an analysis of household panel data

Schäufele

Hamm

2018

Renew. Agric. Food Syst.

View full text Add to dashboard Cite

show abstract

“…Previous efforts to measure the price elasticity of demand for organic produce have produced inconsistent results. A London-area study found own-price elasticities for organic fruit and vegetables were approximately three times higher than for conventional ones (Fourmouzi et al 2012; also see Kasteridis and Yen 2012 for similar US results from 2006). An estimate of Dutch consumers' price elasticity of demand for several vegetables found the expected negative signs but never found elastic demand (Bunte et al 2010).…”

Section: Previous Price Elasticity Estimatesmentioning

confidence: 91%

“…As to cross-price elasticities between organic and conventional produce, Fourmouzi et al (2012) found they were low, especially for devoted or frequent organic buyers. Bezawada and Pauwels (2013) found that reductions in organic product prices hurt conventional product sales more than vice versa.…”

Section: Previous Price Elasticity Estimatesmentioning

confidence: 96%

US Household Demand for Organic Fruit

et al. 2017

View full text Add to dashboard Cite

We estimate US household monthly elasticities of demand for some of the more popular organic fruits. To our knowledge, this is the first US-wide, multi-year analysis of price and income elasticities for various organic fruits. We calculate elasticities of demand for lowincome, middle class, and rich income bracket households using three estimation techniques: two econometric methods and one machine learning method (least absolute shrinkage and selection operator (LASSO)). Demand estimates are based on Nielsen scanner data from approximately 60,000 households collected from 2011 to 2013. Generally, we find that ownprice conditional and unconditional elasticities of demand for organic fruits are negative. Unconditional elasticity magnitudes tend to be largest in the representative middle-class household. Income elasticities of demand measurements are inconsistent and often statistically insignificant. This finding is consistent with the survey literature finding that many consumers Page 2 of 84 buy organic food for mostly moral or ethical reasons. We run two policy experiments: a 10% subsidy of organic fruits, and a 10% tax on conventional fruits. Our hypothetical policies engender a stronger reaction among the general public than habitual buyers of organic fruit; unconditional purchase and expenditure elasticities are generally larger than conditional purchase and expenditure elasticities. Finally, we find that elasticities measured with the LASSO technique are not radically different than those measured with econometric methods. The most noticeable difference between the two analytical techniques is that LASSO is more likely to find price and income elasticities of demand that indistinguishable from zero, both substantively and statistically.

show abstract

“…Second, the Double-Log estimation of demand provides only a very rough indication of the marginal effect of a price change on the quantity consumed. Due to this and other shortcomings, an Almost Ideal Demand System (AIDS) a la Deaton and Muellbauer (1980), which has become common practice in such estimations (Fourmouzi et al, 2012), was also estimated. In this model, the demand equations for n goods can be expressed as a system of expenditure share equations:…”

Section: Methodsmentioning

confidence: 99%