UVM Theses and Dissertations
Format:
Print
Author:
Li, Minghao
Dept./Program:
Community Development and Applied Economics
Year:
2013
Degree:
M.S.
Abstract:
While food products with credence attributes such as organic and local have grown significantly in the U.S. and many other nations in the past two decades, there is a growing need for information on consumer valuation and willingness to pay (WTP) for such food attributes for producers and policymakers. Using data from a large scale "Taste of Place" survey conducted in the northeast U.S., this thesis examines the factors that determine consumer preference and WTP for credence food attributes and derives economic and market implications. The main body of this thesis includes two studies organized in journal article format.
The first article examines consumer WTP, estimates price elasticity, and calculates the optimal premium rates for selected credence food attributes. The empirical results indicate that respondents' WTP varies significantly across attributes and is closely associated with certain demographic factors. The results also show that the WTP for an individual attribute could be higher than the WTP for a composite attribute that includes the individual attribute. The estimated optimal premium rates and estimation procedures presented in this paper can help producers and retailers identify the optimal premium rates for each attribute in association with geographical or socioeconomic segments of consumers.
The second article applies an inversed hyperbolic sine double-hurdle model (IHSDH) with dependent errors to investigate consumer WTP for organic, local and Vermont produced food with a focus on the impacts of altruism attributes. While the estimation of the IHS-DH indicates that the flexible parameterization of the IHS-DH is necessary for the data, the empirical results suggest that many consumers perceive organic food and local food to be environmentally friendly and believe local and Vennont produced food would benefit family farms. These findings suggest that the use of individual and composite food attributes in marketing and promotion efforts needs to be selective based on consumer interpretation and valuation of such attributes.
The first article examines consumer WTP, estimates price elasticity, and calculates the optimal premium rates for selected credence food attributes. The empirical results indicate that respondents' WTP varies significantly across attributes and is closely associated with certain demographic factors. The results also show that the WTP for an individual attribute could be higher than the WTP for a composite attribute that includes the individual attribute. The estimated optimal premium rates and estimation procedures presented in this paper can help producers and retailers identify the optimal premium rates for each attribute in association with geographical or socioeconomic segments of consumers.
The second article applies an inversed hyperbolic sine double-hurdle model (IHSDH) with dependent errors to investigate consumer WTP for organic, local and Vermont produced food with a focus on the impacts of altruism attributes. While the estimation of the IHS-DH indicates that the flexible parameterization of the IHS-DH is necessary for the data, the empirical results suggest that many consumers perceive organic food and local food to be environmentally friendly and believe local and Vennont produced food would benefit family farms. These findings suggest that the use of individual and composite food attributes in marketing and promotion efforts needs to be selective based on consumer interpretation and valuation of such attributes.