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Willingness-to-Pay for Attribute Level and Variability: The Case of Mexican Millers' Demand for Hard Red Winter Wheat

Published online by Cambridge University Press:  26 January 2015

R. Karina Gallardo ,
Jayson L. Lusk ,
Rodney B. Holcomb  and
Patricia Rayas-Duarte
R. Karina Gallardo
Affiliation:
School of Economic Sciences - Tree Fruit Research Extension Center, Washington State University, Wenatchee, WA
Jayson L. Lusk
Affiliation:
Department of Agricultural Economics, Oklahoma State University, Stillwater, OK
Rodney B. Holcomb
Affiliation:
Department of Agricultural Economics, Oklahoma State University, Stillwater, OK
Patricia Rayas-Duarte
Affiliation:
Department of Biochemistry and Molecular Biology, Oklahoma State University, Stillwater, OK
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Abstract

In-person interviews were carried out with Mexican millers who were administered a conjoint-type survey designed to incorporate uncertainty in attribute levels. Two methods were used to model millers' risk preferences: a modified mean-variance approach and an explicit expected utility approach. Controlling for variability, Mexican millers are willing to pay premiums for increases in quality factors such as test weight, protein content, falling number, and dough strength/extensibility. We find millers are not particularly sensitive to changes in the variability of quality characteristics. Out-of-sample forecasts suggest the mean-variance model provides an accurate depiction of actual Mexican imports.

Keywords

mean-varianceMexican wheat marketmoment generating functionpreference elicitationwheat qualityC35C42Q13
Type
Research Article
Information
Journal of Agricultural and Applied Economics , Volume 41 , Issue 3 , December 2009 , pp. 599 - 611
Copyright
Copyright © Southern Agricultural Economics Association 2009

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