Hostname: page-component-cd9895bd7-fscjk Total loading time: 0 Render date: 2024-12-23T08:46:14.222Z Has data issue: false hasContentIssue false
  • English
  • Français

An Examination of Consumer Willingness to Pay for Local Products

Published online by Cambridge University Press:  15 September 2016

Aaron Adalja ,
James Hanson ,
Charles Towe  and
Elina Tselepidakis
Aaron Adalja*
Affiliation:
Department of Agricultural and Resource Economics at University of Maryland
James Hanson
Affiliation:
Department of Agricultural and Resource Economics at University of Maryland
Charles Towe
Affiliation:
Department of Agricultural and Resource Economics at University of Connecticut
Elina Tselepidakis
Affiliation:
U.S. Department of Agriculture Economic Research Service
*
Correspondence: Aaron Adalja ▪ Department of Agricultural and Resource Economics ▪ University of Maryland ▪ 2200 Symons Hall ▪ College ParkMD 20742 ▪ Phone 216.374.3136 ▪ Email[email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

We use data from hypothetical and nonhypothetical choice-based conjoint analysis to estimate willingness to pay for local food products. The survey was administered to three groups: consumers from a buying club with experience with local and grass-fed production markets, a random sample of Maryland residents, and shoppers at a nonspecialty Maryland supermarket. We find that random-sample and supermarket shoppers are willing to pay a premium for local products but view local and grass-fed production as substitutes. Conversely, buying-club members are less willing to pay for local production than the other groups but do not conflate local and grass-fed production.

Keywords

beefconjoint analysisfield experimentgrass-fedlocalwillingness to pay
Type
Research Article
Information
Agricultural and Resource Economics Review , Volume 44 , Issue 3 , December 2015 , pp. 253 - 274
Copyright
Copyright © 2015 Northeastern Agricultural and Resource Economics Association 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Abidoye, B.O., Bulut, H., Lawrence, J.D., Mennecke, B., and Townsend, A.M. 2011. “U.S. Consumers’ Valuation of Quality Attributes in Beef Products.” Journal of Agricultural and Applied Economics 43(1): 1–12.Google Scholar
Adamowicz, W.L., Louviere, J., and Williams, M. 1994. “Combining Revealed and Stated Preference Methods for Valuing Environmental Amenities.” Journal of Environmental Economics and Management 26(3): 271–292.Google Scholar
Agricultural Marketing Service. 2009. Farmers’ Market Growth: 1994-2009. AMS, U.S. Department of Agriculture, Washington, DC.Google Scholar
Aoki, K., Shen, J., and Saijo, T. 2010. “Consumer Reaction to Information on Food Additives: Evidence from an Eating Experiment and a Field Survey” Journal of Economic Behavior and Organization 73(3): 433–438.Google Scholar
Brester, G.W., Lhermite, P., Goodwin, B.K., and Hunt, M.C. 1993. “Quantifying the Effects of New Product Development: The Case of Low-fat Ground Beef.” Journal of Agricultural and Resource Economics 18(2): 239–250.Google Scholar
Brown, C. 2003. “Consumers’ Preferences for Locally Produced Food: A Study in Southeast Missouri.” American Journal of Alternative Agriculture 18(4): 213–224.Google Scholar
Brown, C., and Miller, S. 2008. “The Impacts of Local Markets: A Review of Research on Farmers Markets and Community Supported Agriculture.” American Journal of Agricultural Economics 90(5): 1296–1302.Google Scholar
Cameron, T.A., Poe, G.L., Ethier, R.G., and Schulze, W.D. 2002. “Alternative Non-market Value-elicitation Methods: Are the Underlying Preferences the Same?” Journal of Environmental Economics and Management 44(3): 391–425.Google Scholar
Carlsson, E, and Martinsson, P. 2001. “Do Hypothetical and Actual Marginal Willingness to Pay Differ in Choice Experiments? Application to the Valuation of the Environment.” Journal of Environmental Economics and Management 41(2): 179–192.Google Scholar
Carson, R.T., Flores, N.E., Martin, K.M., and Wright, J.L. 1996. “Contingent Valuation and Revealed Preferences Methodologies: Comparing the Estimates for Quasi-public Goods.” Land Economics 72(1): 80–99.Google Scholar
Chang, J.B., Lusk, J.L., and Norwood, F.B. 2009. “How Closely Do Hypothetical Surveys and Laboratory Experiments Predict Field Behavior?” American Journal of Agricultural Economics 91(2): 518–534.Google Scholar
Cummings, R.G., Brookshire, D.S., and Schulze, W.D. (eds.). 1986. Valuing Environmental Goods: A State of the Arts Assessment of the Contingent Method. Totowa, NJ: Rowman and Allanheld.Google Scholar
Cummings, R.G., and Taylor, L.O. 1999. “Unbiased Value Estimates for Environmental Goods: A Cheap Talk Design for the Contingent Valuation Method.” American Economic Review 89(3): 649–665.Google Scholar
Darby, K., Batte, M.T., Ernst, S., and Roe, B. 2008. “Decomposing Local: A Conjoint Analysis of Locally Produced Foods.” American Journal of Agricultural Economics 90(2): 476–486.Google Scholar
Dentoni, D., Tonsor, G.T., Calantone, R.J., and Peterson, H.C. 2009. “The Direct and Indirect Effects of ‘Locally Grown’ on Consumers’ Attitudes towards Agri-food Products.” Agricultural and Resource Economics Review 38(3): 384–396.Google Scholar
Green, P.E., and Srinivasan, V. 1990. “Conjoint Analysis in Marketing: New Developments with Implications for Research and Practice.” Journal of Marketing 54(4): 3–19.Google Scholar
Harrison, G.W., and List, J.A. 2004. “Field Experiments.” Journal of Economics Literature 42(4): 1009–1055.Google Scholar
Kuhfeld, W.F. 2009. Marketing Research Methods in SAS: Experimental Design, Choice, Conjoint, and Graphical Techniques. Cary, NC: SAS Institute, Inc.Google Scholar
List, J.A. 2003. “Does Market Experience Eliminate Market Anomalies?” The Quarterly Journal of Economics 118(1): 41–71.Google Scholar
List, J.A., and Gallet, C. 2001. “What Experimental Protocols Influence Disparities between Actual and Hypothetical Stated Values? Evidence from a Meta-analysis.” Environmental and Resource Economics 20(3): 241–254.Google Scholar
List, J.A., Sinha, P., and Taylor, M.H. 2006. “Using Choice Experiments to Value Non-market Goods and Services: Evidence from Field Experiments.” Advances in Economic Analysis and Policy 6(2): Article 2.Google Scholar
Lohr, L. 1998. “Implications of Organic Certification for Market Structure and Trade.” American Journal of Agricultural Economics 80(5): 1125–1129.Google Scholar
Loureiro, M.L., and Hine, S.E. 2002. “Discovering Niche Markets: A Comparison of Consumer Willingness to Pay for Local (Colorado Grown), Organic, and GMO-Free Products.” Journal of Agricultural and Applied Economics 34(3): 477–487.Google Scholar
Loureiro, M.L., McCluskey, J.J., and Mittelhammer, R.C. 2003. “Are Stated Preferences Good Predictors of Market Behavior?” Land Economics 79(1): 44–55.Google Scholar
Loureiro, M.L., and Umberger, W.J. 2003. “Estimating Willingness to Pay for Country-of-origin Labeling.” Journal of Agricultural and Resource Economics 28(2): 287–301.Google Scholar
Loureiro, M.L., and Umberger, W.J. 2005. “Assessing Consumer Preferences for Country-of-origin Labeling.” Journal of Agricultural and Applied Economics 37(1): 49–63.Google Scholar
Louviere, J.J., Hensher, D.A., and Swait, J.D. 2000. Stated Choice Methods: Analysis and Application. Cambridge, UK: Cambridge University Press.CrossRefGoogle Scholar
Lusk, J.L. 2003. “Effects of Cheap Talk on Consumer Willingness-to-pay for Golden Rice.” American Journal of Agricultural Economics 85(4): 840–856.Google Scholar
Lusk, J.L., Fields, D., and Prevatt, W. 2008. “An Incentive Compatible Conjoint Ranking Mechanism.” American Journal of Agricultural Economics 90(2): 487–498.Google Scholar
Lusk, J.L., Jamal, M., Kurlander, L., Roucan, M., and Taulman, L. 2005. “A Meta-analysis of Genetically Modified Food Valuation Studies.” Journal of Agricultural and Resource Economics 30(1): 28–44.Google Scholar
Lusk, J.L., and Norwood, F.B. 2005. “Effect of Experimental Design on Choice-based Conjoint Valuation Estimates.” American Journal of Agricultural Economics 87(3): 771–785.Google Scholar
Lusk, J.L., Norwood, F.B., and Pruitt, J.R. 2006. “Consumer Demand for a Ban on Antibiotic Drug Use in Pork Production.” American Journal of Agricultural Economics 88(4): 1015–1033.Google Scholar
Lusk, J.L., and Parker, N. 2009. “Consumer Preferences for Amount and Type of Fat in Ground Beef.” Journal of Agricultural and Applied Economics 41(1): 75–90.Google Scholar
Lusk, J.L., and Schroeder, T.C. 2004. “Are Choice Experiments Incentive Compatible? A Test with Quality Differentiated Beef Steaks.” American Journal of Agricultural Economics 86(2): 467–482.Google Scholar
Martinez, S., Hand, M., Da Pra, M., Pollack, S., Ralston, K., Smith, T., Vogel, S., Clark, S., Lohr, L., Low, S., and Newman, C. 2010. Local Food Systems: Concepts, Impacts, and Issues. Economic Research Report 97, Economic Research Service, U.S. Department of Agriculture, Washington, DC.Google Scholar
McFadden, D. 1974. “Conditional Logit Analysis of Qualitative Choice Behavior.” In Zarembka, P., ed., Frontiers in Econometrics. New York, NY: Academic Press.Google Scholar
Mitchell, R.C., and Carson, R.T. 1989. Using Surveys to Value Public Goods: The Contingent Valuation Method. Baltimore, MD: Johns Hopkins University Press for Resources for the Future.Google Scholar
National Agricultural Statistics Service. 2009. 2007 Census of Agriculture: Organic Production Survey. NASS, U.S. Department of Agriculture, Washington, DC.Google Scholar
Oberholtzer, L., Dimitri, C., and Greene, C. 2005. “Price Premiums Hold on as U.S. Organic Produce Market Expands.” Economic Research Service, U.S. Department of Agriculture, Washington, DC. Google Scholar
Onozaka, Y., and Thilmany McFadden, D. 2011. “Does Local Labeling Complement or Compete with Other Sustainable Labels? A Conjoint Analysis of Direct and Joint Values for Fresh Produce Claims.” American Journal of Agricultural Economics 93(3): 693–706.Google Scholar
Parcell, J.L., and Schroeder, T.C. 2007. “Hedonic Retail Beef and Pork Prices.” Journal of Agriculture and Applied Economics 39(1): 29–46.Google Scholar
Savage, S.J., and Waldman, D.M. 2008. “Learning and Fatigue during Choice Experiments: A Comparison of Online and Mail Survey Modes.” Journal of Applied Econometrics 23(3): 351–371.Google Scholar
Umberger, W.J., Boxall, P.C., and Lacy, R.C. 2009. “Role of Credence and Health Information in Determining U.S. Consumers’ Willingness to Pay for Grass-finished Beef.” Australian Journal of Agricultural and Resource Economics 53(4). 603–623.Google Scholar
Umberger, W.J., Feuz, D.M., Calkins, C.R., and Killinger-Mann, K. 2002. “U.S. Consumer Preference and Willingness-to-pay for Domestic Corn-fed Beef versus International Grass-fed Beef Measured through an Experimental Auction.” Agribusiness 18(4): 491–504.Google Scholar
U.S. Census Bureau. 2011a. “American Community Survey” one-year estimates, 2011. U.S. Census Bureau, Washington, DC.Google Scholar
U.S. Census Bureau. 2011b. “American Community Survey” five-year estimates, 2007-2011. U.S. Census Bureau, Washington, DC.Google Scholar
Ward, C.E., Lusk, J.L., and Dutton, J.M. 2008. “Implicit Value of Retail Beef Product Attributes.” Journal of Agricultural and Resource Economics 33(3): 364–381.Google Scholar