59 Pages Posted: 4 Apr 2011 Last revised: 26 Mar 2014
Date Written: March 2014
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.
Keywords: consumer behaviour, field experiments
JEL Classification: C93, D12, D64, M14
Suggested Citation: Suggested Citation
Hainmueller, Jens and Hiscox, Michael J. and Sequeira, Sandra, Consumer Demand for the Fair Trade Label: Evidence from a Multi-Store Field Experiment (March 2014). Review of Economics and Statistics, Forthcoming; Formerly: MIT Political Science Department Research Paper No. 2011-9B. Available at SSRN: https://ssrn.com/abstract=1801942 or http://dx.doi.org/10.2139/ssrn.1801942