HUI Working Papers, HUI Research
So how much do you pay for ethical consumption? Estimating the hedonic price for Fair Trade coffee in Sweden
Abstract: This study applies the method of hedonic pricing to
estimate the impact of the Fair Trade-label on the market for coffee in
Sweden. Over the past decades, the general public interest in products
bearing some environmental or social responsibility label has grown
considerably in the EU, and Sweden is one of the countries where public
awareness of labelling issues is particularly high. The sale of labelled
products in regular supermarkets has increased significantly in Sweden but
despite growing supply and acceptance, a lot remains to be understood about
the market. This study takes a revealed preference approach using weekly
scanner sales panel data recently made available by Nielsen and the Swedish
Retail Institute (HUI). A representative sample of grocery stores all over
Sweden is covered, as well as all major brands supplying roasted coffee.
Hedonic estimates are obtained for what consumers pay for different
characteristics as accessible from the package. Results point to a
considerable premium of 38% paid for Fair Trade coffee, underlining high
public awareness reflected in the retailers’ pricing policy.
Keywords: Fair Trade; coffee; eco-labels; hedonic pricing; ethical consumption; (follow links to similar papers)
JEL-Codes: J80; L11; Q56; (follow links to similar papers)
28 pages, July 8, 2011
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