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Consumer Demand for the Fair Trade Label: Evidence from a Multi-Store Field Experiment

59 Pages Posted: 4 Apr 2011 Last revised: 26 Mar 2014

Jens Hainmueller

Stanford University - Department of Political Science; Stanford Graduate School of Business; Stanford Immigration Policy Lab

Michael J. Hiscox

Harvard University

Sandra Sequeira

London School of Economics & Political Science (LSE) - Department of Economics

Date Written: March 2014

Abstract

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

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

Jens Hainmueller (Contact Author)

Stanford University - Department of Political Science ( email )

Stanford, CA 94305
United States

HOME PAGE: http://www.stanford.edu/~jhain/

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

Stanford Immigration Policy Lab

30 Alta Road
Stanford, CA 94305
United States

Michael Hiscox

Harvard University ( email )

1737 Cambridge Street
Cambridge, MA 02138
United States

HOME PAGE: http://www.people.fas.harvard.edu/~hiscox/

Sandra Sequeira

London School of Economics & Political Science (LSE) - Department of Economics ( email )

Houghton Street
London WC2A 2AE
United Kingdom

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