Abstract
Although the production costs and prices of eco-labeled products are higher than those of conventional ones, the use of greener products can lead to better environmental outcomes. Thus, the consumers’ preferences for eco-labeled products should be investigated to understand the potential of markets with green products. This study attempts to examine the consumers’ preference or willingness to pay (WTP) a premium for eco-labeled products using a specific case study of a 43-inch LED TV, which is a common home appliance in Korea. For this purpose, a contingent valuation survey of 1000 Korean consumers was conducted in June 2016. We used a one-and-one-half-bounded dichotomous choice question to derive the additional WTP responses and a spike model to analyze zero additional WTP responses. The mean additional WTP a premium for the eco-labeled 43-inch LED TV is estimated to be KRW 29,007 (USD 24.8), which is statistically meaningful at the 1% level. This value amounts to 3.9% of the price of a conventional 43-inch LED TV (KRW 750,000 or USD 640.5) and can be interpreted as the external benefit of an eco-labeled LED TV. We can conclude that Korean consumers are ready to pay a significant premium for eco-labeled LED TVs. Moreover, we examined the consumer’s characteristics that affect the probability that the person will be willing to pay a premium for an eco-labeled LED TV and found that it would be effective to set high-income, older, highly-educated, and female consumers with children as marketing targets.
Highlights
Various pollutants, such as air pollutants, waste water, and waste, are emitted into the environment in the course of manufacturing electronic products [1,2]
Zero additional willingness to pay (WTP) results in a “no–no” response or a “no–no–no” response, and Table 1 indicates that 480 households (48.0%) revealed zero additional WTP for an eco-labeled LED TV
This means that our strategy of adopting a spike model in the analysis of the OOHB dichotomous choice (DC) contingent valuation (CV) data is appropriate
Summary
Various pollutants, such as air pollutants, waste water, and waste, are emitted into the environment in the course of manufacturing electronic products [1,2]. These emitted pollutants exert negative effects on human health, as well as the environment [3]. The Korean government has introduced a scheme for environmentally-friendly products that are created using less water and electricity and emitting fewer pollutants. The Korean government grants eco-label certification to eco-friendly products that may cause less environmental pollution or save resources compared with other products intended for the same use. The attached eco-label indicates that the product is manufactured using an eco-friendly process and production method (PPM) [4,5]
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