Consumer Demand for the Fair Trade Label: Evidence from a Multi-Store Field Experiment
Stanford University - Department of Political Science; Stanford Graduate School of Business
Michael J. Hiscox
London School of Economics
Review of Economics and Statistics, Forthcoming
Formerly: MIT Political Science Department Research Paper No. 2011-9B
We provide new evidence on consumer demand for ethical products from experiments conducted in a U.S. grocery store chain. We find that sales of the two most popular coffees rose by almost 10% when they carried a Fair Trade label as compared to a generic placebo label. Demand for the higher priced coffee remained steady when its price was raised by 8%, but demand for the lower priced coffee was elastic: a 9% price increase led to a 30% decline in sales. While consumers attach value to ethical sourcing, there is significant heterogeneity in willingness to pay for it.
Number of Pages in PDF File: 59
Keywords: consumer behaviour, field experiments
JEL Classification: C93, D12, D64, M14
Date posted: April 4, 2011 ; Last revised: March 26, 2014
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