Higher Price Premium Research Articles

Consumers preferences and social sustainability: a discrete choice experiment on ‘Quality Agricultural Work’ ethical label in the Italian fruit sector

The Italian legislator has adopted several instruments to discourage undeclared work and exploitative labour in agriculture, mostly of a penal-repressive nature. Among the direct and indirect policy measures, the ‘Quality Agricultural Work Network’ represents an interesting approach to producing a ‘whitelist’ of farmers compliant with labour regulations. A law proposal intends to establish the ‘Quality Agricultural Work’ (QAW) ethical label to incentivise farmers to join the network, to which a limited percentage of farms have signed up. This study aims to investigate consumer preferences for the QAW label in the Italian fruit sector. We conducted a choice experiment on a sample of 324 consumers. Willingness to pay for ethical labels was estimated before and after information treatment was administered to evaluate the prospective effects of promotional and information campaigns. The information treatment conveyed a clear and concise message about the QAW project and its ethical label. The results show that consumers would pay a high price premium for fruit produced under fair working conditions, indicating that there may be a market space for the QAW label. Moreover, consumers perceive environmental and social sustainability claims as complementary contexts where both dimensions of sustainability are relevant.Graphical abstract

A punishment shared is a punishment halved: Concurrent recalls reduce products’ market share loss

AbstractManufacturers often recall defective products. When this occurs, multiple recalls of defective products can be announced in the same statement or separate statements (i.e., concurrent vs. separate recalls). We draw upon the attribution theory to study whether and how concurrent (vs. separate) recalls of multiple products affect each recalled product's market share loss. In this study, a unique dataset of product recalls in the Chinese automobile industry and two experiments reveal that when products are concurrently (vs. separately) recalled, each product's defect is perceived as less distinctive, thus assuaging the market share loss for the focal product. In addition, the mitigating effect of concurrent recalls is stronger when the focal product is recalled with many (vs. few) other products but weaker for products with high price premiums and those with a recall history. These insights suggest that manufacturers can strategically use concurrent recalls to minimize market share loss resulting from product recalls, particularly when dealing with lower‐priced products or those with a limited recall history.

Hedonic Analysis of Dried Pasta Prices Using E-Commerce Data-An Explorative Study.

Italy is the world leader in the production of pasta and the Italian market is characterized by strong price competition among large industrial producers. Thus, recently, many small and medium firms have started to differentiate their products as a way to achieve higher margins and escape from price competition. Using data on the prices and characteristics of dried pasta sold online in the Italian market and a hedonic price model, we estimated the implicit prices associated with several attributes that are currently available for dried pasta. We find that the "artisanal" statement on pasta labeling is associated with the highest price premium. Also, results show that protected geographical indication, Halal and Kosher certifications, and the use of ancient wheat varieties are valuable features of dried pasta sold in the Italian market. Instead, a positive, albeit limited in magnitude, price premium is associated with dried pasta made using 100% Italian durum wheat semolina, the organic method, enriched with additional ingredients. Findings suggest that producers can differentiate their products by mostly emphasizing their small-scale production methods, the territorial connotation, and the cultural and environmental sustainability of production. Otherwise, certifying dried pasta as Halal or Kosher can represent a complementary or alternative strategy to differentiate the product and achieve a higher price.

A bio-economic modelling comparison of a Friesian Bull-Beef system and a New Generation Beef system with Friesian bulls slaughtered at 10–14 months old

ABSTRACT Finishing of dairy-origin calves in an accelerated ‘New generation beef’ (NGB) beef finishing system for slaughter up to 14 months of age has potential co-sector benefits. These include production efficiencies and a reduced number of dairy calves slaughtered at a very young age. In the present study, a NGB system and an 18-month Bull-Beef system were first modelled separately, both purchasing three-month-old Friesian bull calves. Then Mixed systems with varying proportions of both NGB and Bull-Beef animals were modelled. Production, feed balance and profitability were compared, using cash operating surplus (COS) as a profit indicator. In the NGB scenario, double the number of animals were finished compared with the Bull-Beef scenario; however, monthly feed demand was less synchronous with predicted pasture supply, requiring more feed transfer via pasture baleage. The COS for the NGB system was $−571/ha, with less income and greater costs than the Bull-Beef system (COS = $2026/ha). Break-even prices for NGB animals were up to 74% above current prices, but break-even prices were less in Mixed systems with a greater proportion of Bull-Beef animals. Without high price premiums, challenges remain for the NGB systems appeal to beef finishers due to their low slaughter weights and sale prices.

신축 아파트 가격 결정요인

A study analyzed the impact of housing characteristics on apartment prices in the Gangnam districts of Seoul using transaction data from 2018-2022. The study found that certain housing characteristics such as the number of floors, reputation of construction companies, number of parking spaces, and elapsed years had a positive effect on price. On the other hand, factors like the number of households, dedicated area size, and floor area ratio had a negative effect. Apartments with a view of the Han River had the highest price premium among environmental characteristics. Additionally, the transaction year had a strong positive effect on price, indicating a continuous increase in apartment prices during the studied period.

Cacao Oro

Abstract In November 2018, John Warrington, CEO of Cacao Oro de Nicaragua, was about to share a recommendation that would surely change the company’s future. Over the last few weeks, John had engaged in analyzing the evolution of the company and the implications for its future. As a result, he felt the need to formulate a competitive strategy to guide the expansion in the next few years. He identified four market options: first, to focus on bulk cocoa, with commodity prices and high-volume transactions; second, to specialize in fine or flavor cocoa, with high price premiums and low-volume transactions; third, to focus on certified bulk cocoa, with small price premiums and high-volume transactions; and, finally, to develop a “mixed” strategy with a combination of the three previous options. A few years earlier, plans were underway to develop 10 000 ha of cocoa in Nicaragua to become the world’s largest cocoa producer. To start the venture, the first effort was to restore a 3000-ha farm in Rosita, a region on the Atlantic coast of Nicaragua, damaged by Hurricane Félix in 2008. In 2014, Cacao was born with restoration works to enable 2000 ha for cocoa cultivation. The first harvest in 2017 confirmed that the project was on the right track. And John thought that the time was ripe to reflect on the company’s future strategy. The Teaching Note to this article can be accessed at 10.6084/m9.figshare.23500566.

Research on Data Asset Pricing based on Bargaining Model

Data, is difficult to be priced for its timeliness and non-physical characteristics. This paper innovatively brings the Real Option Method of intangible assets into the discussion to better pricing data assets. The conclusion is that, under the condition of perfect information, a seller can only be the price taker. And, trading platforms play an important role in restraining sellers’ high price premium behavior.

Costly crustaceans: A hedonic price analysis of the Florida stone crab

The stone crab (Menippe mercenaria and Menippe adina) fishery is the second most valuable commercial fishery in the state of Florida, with $30 million in dockside annual landings in 2019, It is a unique fishery in that only the claws are harvested, and the crab is returned to the sea where a high portion of them survive. There is substantial variability in the ex-vessel prices paid to fishers for stone crab claws, with claws yielding from $5 to over $30 per pound. However, there is limited knowledge with respect to what influences the prices of this valuable seafood product. Hedonic models allowed us to estimate the effect that different product attributes of a harvested stone crab claw have on the price. Here, we used commercial landings data from 2009 to 2020 to investigate the impact of attributes including claw size, county landed, fishing year, month, and area fished (inshore or offshore). The premiums associated with these attributes are highly variable with the largest premiums based on claw size followed by county landed, with south Florida and the Keys having higher price premiums than northwest Florida. There was interannual variation for the month attribute, with the middle of the fishing year having the highest price (January, February) and the lowest was placed on the start and end of each fishing year (October, November, May). These results provide basic economic information and regional insights into one of the most valuable fisheries in Florida and the Gulf of Mexico, and can help inform managers and stakeholders on the balance between profitability and sustainability of this unique fishery.

Holding back the storm: Dam capitalization in residential and commercial property values

Large-scale flooding is becoming increasingly common due to prolonged and intensive rainfall caused by climate change. Communities have mitigated this risk by building flood protection, though it is unclear whether residents are aware of these public works or the protection they confer. We provide insight on this matter by examining whether apartment, commercial, and single-family home values responded to the completion of the Gokayama Dam in Fukuoka Prefecture, Japan. Using listing data between 2015 and 2019, we find apartments downstream from the Gokayama Dam experienced a 1.8% price increase relative to apartments in other floodplains after Typhoon Prapiroon hit western Japan and tested the dam. Renters used the natural disaster as a learning experience to update their perceptions of flood risk as opposed to the completion of the dam, suggesting a possible disconnect between perceptions of flood risk and objective risk. Higher price premiums are also observed in first floor units, units closer to rivers, and in areas where floodwaters are expected to exceed 2 m, while rental units designed as temporary housing received no premium. Finally, we find the capitalized gains from the apartment rental market are small in comparison to premiums paid by homeowners and commercial renters, where prices increased by 11.7% and 9.2% respectively. Taken altogether, the Gokayama Dam provides $146.5 million in downstream benefits each year, though it is unclear how long these price effects will last.

Information source and content – Drivers for consumers’ valuation of fairly traded chocolate

To learn about the role of information content and source as catalysts to increase consumers' valuation of fairly traded foods, we conducted an online survey with 2500 consumers representative of the German population. Within the online survey, respondents were randomly assigned to one of five information treatments or the control group. We employ the contingent valuation approach to measure the willingness-to-pay (WTP) premium for chocolate with the Fairtrade label compared to similar conventional chocolate. To estimate WTP and another outcome which measures the participants’ purchasing intentions, we use ordinary least squares and interval regressions. We find that German consumers are willing to pay a high price premium for a Fairtrade label despite limited knowledge about the certification. This WTP is relatively robust to additional supportive information provision irrespective of the information source. However, the purchasing intention can rise due to information provided by a retailer or the government. While a supportive statement by a university does not seem to incentivize the valuation of Fairtrade certified chocolate, we find that an unsupportive (zero effect) statement of the same source can discourage the purchasing intention. Our findings imply that policymakers and communicators of scientific information need to mind the risk of generalized science communication aiming at forming the public opinion and create information campaigns to increase purchasing frequency. • Little knowledge about certification impedes valuation of Fairtrade chocolate. • 2500 German consumers were exposed to five treatments in an online survey. • Information does not affect the initial high willingness to pay. • Supportive information by retailers or government increases purchasing intention. • Zero-effect statements by a university decrease the purchasing intention.

The interplay of eco-labels and price cues: Empirical evidence from a large-scale field experiment in an online fashion store

Even though eco-labels are a promising means to support consumers in making sustainable choices, insights into the effectiveness of eco-labels in combination with conventional marketing tools are scarce. This field study (a) investigates the effect of eco-labels on consumers' actual purchase behavior in an online fashion store, (b) examines the moderating role of price premiums, and (c) reveals a three-way interaction between eco-labels, price premiums, and discounts. Based on 58,000 actual purchase decisions from a large-scale field experiment, the results indicate a beneficial effect of eco-labels on consumer purchases and that higher price premiums can even reinforce the positive effect of eco-labels. The empirical findings also suggest that discounts only increase purchases for eco-labeled products in combination with high price premiums, but not with low price premiums. The present study has important implications for research on eco-labels and their interplay with other marketing cues and provides valuable guidance to marketers and policymakers on how to price eco-labeled products.

Strategic alignment of pricing oil products from Brent conditionally on market regimes using Markov and cluster‐based switching dynamics

AbstractAsymmetries and non‐linearities in oil prices are of high importance for energy policy and strategy. The effectiveness of energy policy depends heavily on the ‘conceptualization’ of states, regimes and less on the absolute price level. Based on the strategic alignment theory and the matching perspective, we claim that recurring oil market dynamics showcase the existence of various regimes across which pricing relationships differ. Regimes are examined by combining two methodologies: Cluster‐based Regression (CBR) and Markov‐Switching Dynamic Regression (MSDR). CBR identifies spatial regimes by clustering Brent as a proxy variable, while MSDR identifies temporal regimes by presuming a probabilistic superposition of states which transition as a discrete time Markov chain. Results have both policy and methodology contributions. A reversion and a cyclicality phenomenon in pricing, resembles the Joseph and Noah effects in terms of persistence, expected duration and probability of transition. CBR describes a serial process in pricing from ‘bull’ to ‘bear’ and then to ‘transitory’ state. Differences in asymmetry and high price premiums, conditionally on market states, are detected among products. Matching probabilities show robustness of results.

High price premiums as barriers to organic meat demand? A hedonic analysis considering species, cut and retail outlet*

Rigid price setting and high organic price premiums have been perceived as major purchase barriers to organic meat products. While emerging price and product differentiation have been reported for organic products in other categories, empirical evidence for the organic fresh meat market is lacking. We estimate a hedonic pricing model based on German household scanner data for fresh red meat and poultry purchases from 2012 to 2014. We derive and test for differences in organic price premiums across distribution channels, species and product type. Our results indicate significant variation in organic premiums, which range from 14 per cent for minced beef to 108 per cent for chicken breasts, and are considerably lower than previously reported estimates. We also find substantial overlaps in the distributions of conventional and organic prices for selected products. Our results suggest that high price premiums can no longer serve as the dominant explanation for low market shares of organic red meat. Marketers and policymakers may instead communicate the benefits of organic meat over conventional premium alternatives more clearly or increase the availability of organic meat.

Product differentiation and brand building: a hedonic analysis of yogurt price in China

The Chinese yogurt market has seen strong growth in recent years. To meet consumers’ diverse demand, yogurt manufacturers have invested substantially in product and brand strategies – they not only introduce new attributes to yogurt, but also create sub-brands with distinct product positioning. However, little is known regarding the effectiveness of these strategies. We fill this research gap by estimating the price premiums associated with main yogurt attributes and brands using a hedonic analysis framework. Our main findings are that plain flavored yogurt and yogurt with sugar are associated with negative price premiums while having fat, having probiotics, ambient and being designed for kids are associated with positive price premiums. Moreover, sub-brand effect plays an important role in consumer’s valuation of yogurt due to their distinct product positioning, and sub-brands that position themselves as natural, ambient, European-style, traditional style, fruits and grains, and for children have high price premium.

Regional Origin Outperforms All Other Sustainability Characteristics in Consumer Price Premiums for Honey: Empirical Evidence for Germany

Sustainability and online retailing are two of the main challenges in the food industry. This study analyzes how honey characteristics, including sustainability indicators, affect consumer prices for honey, using 241 German honey prices in online and offline retailing. Many honey characteristics significantly influence honey prices. However, a clear identification of the regional origin of honey has a particularly strong impact on the consumer price premium. It outperforms all other sustainability indicators such as fairtrade certification, organic production, and environmentally friendly packaging. Regional origins that receive high relative and absolute consumer price premiums are Germany and German regions as well as individual EU and non-EU countries that have a reputation for high-quality in the honey market. Given this evidence, the major demand-side argument behind high consumer price premiums for defined origins appears to be food-safety related concerns. Thus, foreign suppliers will gain from international honey trade with Germany in different ways, depending on their reputation for quality. The magnitude of price premiums is surprisingly stable across different years, as are online prices of honeys that belong to the “core” assortment. Changes in the depth of the assortment, such as non-price competition, rather than price adjustments clear the market.

Opening Bid Strategies in English Auctions

Existing residential homes in Norway are sold by English auctions. This provides an exclusive opportunity to examine opening bid strategies for high-valued objects. Using unique data from surveys and auction journals, we find that the direct price effect of a high opening bid is stronger than the intimidation effect. A higher opening bid is associated with an overall higher price premium in OLS and fixed-effects regressions. Our results have implications for both buyers and sellers in situations where auctions and auction-like sales mechanisms are used, and for policy makers regarding auction process rules and market regulations.

A földrajzi árujelzős termékek helyzete a magyarországi élelmiszerdiszkontokban

Több mint 25 évvel ezelőtt az Európai Unió (EU) létrehozta a saját, sui generis földrajzi árujelzős rendszerét azon termékek nyilvántartásához, amelyek minősége, hírneve vagy egyéb meghatározó jellemzői összefüggnek földrajzi eredetükkel. 2018 végén az Európai Bizottság hivatalos nyilvántartása (a DOOR adatbázis) 1 448 regisztrált, földrajzi árujelzővel ellátott élelmiszert tartalmazott, melyek száma továbbra is dinamikusan növekszik. Tanulmányunkban több okból kifolyólag is a Magyarországon működő élelmiszer diszkontáruházakat vizsgáltuk annak érdekében, hogy megbecsüljük a földrajzi árujelzővel ellátott termékek piacméretét és árszínvonalát. Először is, a diszkontáruházak részesedése a magyar élelmiszer-kiskereskedelemben folyamatosan növekszik és az átlagos magyar fogyasztók többsége számára elérhetőek. Továbbá jellemzőjük, hogy kínálatuk szinte állandó és korlátozott, a diszkontáruházak leginkább az árérzékeny fogyasztókat célozzák meg, tehát a diszkontokban az árprémium minimális szintje határozható meg. Ebben a tanulmányban alulról szeretnénk megbecsülni a magyar földrajzi árujelzővel ellátott termékek piacméretét és árprémiumát a közvetlen helyettesítő termékeikhez viszonyítva. Ahhoz, hogy valós piaci adatokat gyűjthessünk, minden hónapban (2018. január-december) próbavásárlást végeztünk egy-egy Budapesten található Aldi, Lidl és Penny Market kiskereskedésben. Összegyűjtöttük a rendelkezésre álló földrajzi árujelzővel ellátott termékek és azok legközelebbi helyettesítő termékeinek adatait, amelyek a boltokban elérhetők voltak, majd az így előálló, több száz megfigyelésből álló adatbázist elemeztük. Eredményeink azt mutatják, hogy a magyar diszkontokban elérhető földrajzi árujelzős termékek száma korlátozott, ám kínálatuk időben állandó. A magyar diszkontokban elérhető földrajzi árujelzővel ellátott élelmiszerek többsége olasz, és az átlagos árprémiumuk pedig 43% körüli, azonban jelentős különbségekkel. Eredményeink azt mutatják, hogy a földrajzi árujelzővel ellátott élelmiszerek jelenleg korlátozott jelentőséggel bírnak a magyar élelmiszerpiacon, mivel korlátozottan kaphatók. Másrészt, a földrajzi árujelzők valódi árprémiummal rendelkeznek Magyarországon is, és egy kevésbé árérzékeny fogyasztókat megcélzó kiskereskedelmi áruházban ennél magasabb árprémium is várható. JEL besorolás: M31, M37, O13, O34, Q13

Quality Management Practices of Intensive Whiteleg Shrimp (Litopenaeus vannamei) Farming: A Study of the Mekong Delta, Vietnam

Continuous warnings on quality and food safety of shrimp products from importers have led to increases in port rejections. This has increased awareness amongst Vietnamese farmers for conducting shrimp farming according to specific certification guidelines. The purpose of this paper is to clarify the situation of quality control and effectiveness of Good Aquaculture Practices (GAP) in Vietnam (VietGAP) for intensive shrimp systems by making a comparison between VietGAP and non-GAP applied farms. The farmers in the GAP system performed well on seven control points related to quality management, especially regarding reservoir construction, water monitoring, and chemical use. Of the farms, 49% reported disease, and the ratio of safety rejections was low. The farmers in non-GAP farms appeared to have weak practices in quality control with high usage of antibiotics, leading to 64% of farmers reporting disease and 20% of tested shipments being rejected. The VietGAP applied system has the potential to deal with disease and quality problems to increase export opportunity for Vannamei shrimp. However, VietGAP does not generate a high price premium in itself because it is not a recognized certificate in the global markets. The results reinforce previous findings regarding eco-certification and how it can be a useful tool to reduce small-scale producers’ risk, even though it does not necessarily generate a price premium.

Limited take-up of ecocertification by tourism firms: a goldilocks effect?

Using club theory, Mzembe et al. (2020) examined why tourism operators adopt or abandon ecocertification. Their results resolve a longstanding paradox in tourism ecocertification, whereby programs persist despite low take-up amongst potential members. The mechanism is that programs start by signing up high-performing enterprises, creating an attractive club, but to sign up additional members they then lower entry standards, opening membership to poorly performing enterprises. This makes the certification club less exclusive, and dilutes benefits. In addition, if only few tourist clients rely on ecocertificates, it creates intra-club rivalry for benefits. Therefore, early-joining, high-performing members leave, creating member turnover and keeping overall take-up low. This is an example of a Goldilocks effect, a couplet of mechanisms that jointly prevent a parameter taking very large or very small values, or render the parameter observable only within a certain range. This effect applies only for private third-party ecocertification programs that rely on member fees to remain in business. It may not apply to programs operated by government agencies, or by private entities with government monopolies. It applies for ecocertification, where financial rewards of membership are limited; but not necessarily for luxury labels, which can sustain high price premiums.

ORTHODOX TEA: VALUE CHAIN ANALYSIS FROM THE PERSPECTIVE OF CERTIFICATION IN ILAM DISTRICT OF NEPAL

This study was conducted in the Ilam district of Nepal to identify the value chain actors of certified orthodox tea and estimating the share value of respective actors along the chain. 160 households (80 certified and 80 non-certified tea growers) from Ilam, Suryodaya, Dewmai Municipalities, and Phakphokthum Rural Municipality were selected by using simple random technique. Primary data were collected from the pre-tested semi-structural interview schedule by using KoBoToolbox, direct observation, focus group discussions, key informant interviews, and rapid market appraisal whereas secondary data were collected from journals, articles, bulletins, and reports from different organizations. This study revealed that the certified tea growers were small farmers with the total tea cultivation area 0.64 ha. The share of orthodox tea on the total annual income of HHs was 31.98%. Certified orthodox tea growers can sell their products to contracted tea processing factories with a guaranteed market. The return from certified green tea leaves was higher (NRs.70.74/kg) as compared to the non-certified green tea leaves (NRs. 41.87/kg). But yields were found relatively low among the certified orthodox growers due to which high price premium obtained for the certified orthodox tea barely compensated for the yield difference. In addition to production, processing and the value addition are the most profitable, but this part of the value chain is done by a limited number of private tea processing factories. The findings of this study indicate restructuring as well as changing modes of production to increase the yield, capturing value-addition in the orthodox tea supply chain, and intervention to support processing facilities and infrastructure, and strengthening of national brand can enhance return to actors.