Consumer willingness to pay for quality attributes of fresh seafood: A labeled latent class model

Abstract

We applied a labeled choice experiment (LCE) to investigate consumer demand and choice behavior for fresh seafood in a retail market. The LCE was conducted for a large number of seafood alternatives (i.e., seafood species) labeled by the respective seafood name (e.g., cod, salmon, mussels). Consumer heterogeneity in preference was expressed by estimating a labeled latent class model with alternative-specific effects, which varies choice probability and model parameters over seafood alternatives and across classes. The willingness to pay (WTP) for extrinsic attributes (e.g., product form, production method, and country of origin), and the rank ordered-intrinsic value were estimated for each seafood alternative within classes and the entire market. The WTP estimate in our study is expected to be more accurate than those derived from studies based on single product alternatives because the LCE allows respondents to evaluate choice alternatives through both attribute judgment and alternative comparison. Exploring a variety of product alternatives is also meaningful to firms with multiple products (e.g., fresh seafood retailers) or firms with many direct competitors.