Scandinavian Working Papers in Economics
Ratio Working Papers,
The Ratio Institute
No 152: Does Shelf-Labeling of Organic Foods Increase Sales? Results from a Natural Experiment
Sven-Olov Daunfeldt () and Niklas Rudholm ()
Additional contact information
Sven-Olov Daunfeldt: The Ratio Institute and Dalarna University, Postal: The Ratio Institute, P.O. Box 3203, SE-103 64 Stockholm, Sweden
Niklas Rudholm: The Swedish Retail Institute (HUI) and Dalarna University, Postal: The Swedish Retail Institute (HUI), SE -103 29 Stockholm , Sweden
Abstract: Can a simple point-of-purchase (POP) shelf-label increase sales of organic foods? We use a random-effects, random-coefficients model, including a time adjustment variable, to test data from a natural experiment in a hypermarket in Gävle, Sweden. Our model incorporates both product specific heterogeneity in the effects of labeling and consumer adjustment to the labels over time. The introduction of POP displays was found to lead to an increase in sales of organic coffee and olive oil, but a reduction in sales of organic flour. All targeted products became less price-sensitive. The results reveal that product specific heterogeneity has to be accounted for, and in some cases consumers adjusted to labeling over time.
Keywords: Product labeling; random coefficient models; ecological products; experimental economics
24 pages, May 26, 2010
Full text files
wp_152.pdf
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