Using Choice Experiments to Estimate the Value of Differentiated Cow's Milk in Puerto Rico

Abstract

In Puerto Rico, we use a choice experiment method through in-person interviews to estimate consumer willingness to pay (WTP) for a half gallon of cow's milk that is produced locally, friendly to the environment and with ethics in animal management. The results from a random parameters logit model show that consumers are willing to pay a premium of up to 41% for differentiated milk, indicating a potential market for these products. We also find that consumer's income and education, and number of dependents affect WTP estimates. Implications for the development of differentiated milk products are discussed.

Using contingent valuation to estimate consumers’ willingness to pay for differentiated coffees in Puerto Rico

“…At first glance, it seems that consumers are willing to pay more for characteristics of differentiated products in the coffee sector, compared to other agricultural sectors in Puerto Rico. For example, Tavárez and Álamo (2021) found that consumers are willing to pay only between $0.74 and $1.26, in addition to the current price of 2L, for characteristics of differentiated cow's milk, contrasting with the results of this study and the results from Tavárez et al (2020) that found a much higher WTP values for similar characteristics of a 227-g (8-ounce) bag of differentiated coffee. However, reported consumption of coffee and milk (units per month) differs across products, which suggests that additional studies are needed to explore how the total value of differentiated attributes varies across agricultural sectors.…”

“…friendly (McCluskey and Loureiro, 2003;Jensen et al, 2004;Tavárez and Álamo, 2021) and free of genetically modified organisms (Loureiro and Hine, 2002). However, most published studies on WTP for differentiated products are conducted in the United States and Europe.…”