Estimating local, organic, and other price premiums of shell eggs in Hawaii

Abstract

Hedonic modeling and retail scanner data were utilized to investigate the influence of local, organic, nutrition benefits, and other attributes of shell eggs on retail price premium in Hawaii. Within a revealed preference framework, the analysis of local and organic attributes, simultaneously, under a single unified setting is important, as such work is highly deficient in the published literature. This paper finds high to moderate price premiums in four key attributes of shell eggs – organic (64%), local (40%), nutrition benefits claimed (33%), and brown shell (18.4%). Large and extra-large sized eggs also experience price premiums over medium sized eggs. With each larger packing size, the estimated coefficients were negative, indicating a price discount, relative to the baseline packing size. However, there is no evidence to support the overwhelming influence of “local” over “organic”, as hypothesized in other research work. Overall, the findings in this paper suggest industry producers and retailers should highlight and market effusively the primary attributes of their shell eggs, including “local”, to remain competitive in the marketplace. Effective communication channels are crucial to delivering the product information, capturing the attention of consumers, and securing retail sales.