Price Premium Research Articles

Premium pricing and capacity rationing for advance selling with consumers regret

Retailers of iconic products commonly implement premium advance selling, which typically triggers regret in consumers. A premium advance selling strategy is centered around differences in pricing and capacity rationing between two selling periods. We develop a decision-theoretic model to capture the key dynamics of a retailer and a unit mass of consumers. We analyze the retailer's decisions on premium pricing and capacity rationing both separately and jointly. We characterize the retailer's strategy equilibrium under certain market conditions and investigate the effect of consumers anticipated regret on the outcomes. Our findings highlight the importance of the relative strength of regret and the difference between premium and spot pricing when a retailer adopts premium advance selling. Our analysis further identifies the forces driving a retailer's use of disparate selling strategies. We contribute to the field by offering tangible insights into whether and how premium advance selling should be adopted to help retailers more proactively leverage or mitigate consumers' regret.

Gender and racial price disparities in the NFT marketplace

This paper empirically investigates the causal impact of avatar gender and race on transaction prices within the Non-Fungible Token (NFT) marketplace. The impetus behind this investigation is grounded in the observation that NFT investors frequently represent a younger, wealthier, and politically progressive demographic, which raises the question of whether this marketplace is less susceptible to prejudice and social bias. Contrary to such expectations, our analysis reveals pronounced gender and racial disparities in NFT prices. Specifically, female CryptoPunks avatars are transacted at a 36.8% lower price compared to their male counterparts (i.e., avatars with similar image attributes), while black CryptoPunks avatars are transacted at a 30.7% lower price compared to their white counterparts. We further identify that avatar features linked to high-tech or higher education attributes (e.g., 3D glasses, Virtual Reality glasses, Nerd glasses) can effectively counter these disparities. We verify the causal patterns revealed in the NFT dataset with a controlled experiment, where NFT buyers are randomly shown the comparable avatars that exhibit variations in race or gender, enabling us to evaluate the impact of these attributes on buyer choices and willingness-to-pay. The experiment confirms the gender (male) and race (white) price premium in the NFT market and suggests that buyers exhibit a preference for NFT avatars resembling their personal identity. We offer insights into policy strategies aimed at promoting racial and gender equity within the NFT marketplace.

Herding behavior in NFT Auction: The role of visual complexity and familiarity

Despite the growing popularity of non-fungible tokens (NFTs) in the market, they still lack established valuation guidelines. Invoking herding and auction theories, this study investigates how NFT collectors’ bidding tendencies are influenced by other collectors’ bidding decisions (herding behavior). This study also examines how NFT visual characteristics, such as complexity and familiarity, moderate herding behavior. We use a computer vision technique to quantify the visual complexity of an NFT and apply transfer learning to capture its visual familiarity. Examining data from a widely used NFT platform, we find evidence of herding behavior in such auctions. Furthermore, our results show that there are nonlinear moderating effects of visual characteristics on herding behavior. Specifically, we find that consumers exhibit a stronger herding tendency at the two extremes of complexity distribution and at the lower extreme of familiarity distribution. Further analysis of the NFT resale market suggests that auction winners consider herding in the primary sale of an NFT as a signal of high demand; thus, they are more willing to resell it and set a higher price premium in the resale. These findings can be taken as input by the NFT market platforms in their NFT display decisions to boost primary market sales and promote resale market participation. The findings can also help content creators formulate creative strategies that lead to higher bidding probability or sales performance.

Did product certification and e-commerce benefit agricultural producers in China?

This study investigates the impacts of product certification and e-commerce on various production and profitability outcomes for grain and cash crop producers in China, using nationally representative survey data. Employing multinomial endogenous switching regression (MESR) estimations, we find that agricultural producers who adopt e-commerce, product certification, or both strategies have significant price premium, increased sales revenue, and greater profitability, despite the increased production costs, with cash crop producer and large-scale producers gaining more benefits. Additionally, we find a synergistic effect: agricultural producers benefit more from adopting both product certification and e-commerce simultaneously than the sum of the effects of adopting two strategies separately. This positive reinforcement between the two strategies is more pronounced among cash crop producers compared to grain crop producers, as well as among larger-scale producers compared to their small-scale counterparts. These findings provide valuable policy implications for assisting agricultural producers in adopting suitable strategies, thereby enhancing their competitiveness and profitability within the global value chains of agri-food.

Effect of Different Organic Manures along with Microbial Consortia on Growth and Yield of Kalmegh (Andrographis paniculata Nees.)

Kalmegh has wide range of medicinal and pharmacological applications. The active ingredient andrographolide is important bioprotectant. Organically grown medicinal plants fetch premium price in the market. Hence the need to explore different manures along with microbial consortia to improve its yield is essential. The experiment was laid out in RCBD with thirteen treatments. Different organic manures and combinations with neem cake were taken as treatments with three replications. Significantly higher plant height was observed in treatment - 100% RDF through vermicompost. Maximum plant spread was recorded in the treatment - 50% RDF through FYM + 50% RDF through neem cake + microbial consortia. Application of sheep manure + neem cake resulted in higher number of branches plant-1, higher number of leaves plant-1, highest fresh weight, highest dry weight, highest root to shoot ratio, highest fresh herbage yield and highest B:C ratio. So, sheep manure + neem cake was found best compared to other manures and combinations.

Factors influencing consumers’ willingness to pay more for green convenience goods in Indonesia

Adopting a green lifestyle by living a healthy life has the consequence of purchasing more expensive green products. This study aimed to explore the factors affecting consumers’ willingness to pay more for green convenience products. This willingness can be influenced by consumers’ attitudes, green lifestyles, and purchase intention. The respondents were 225 individuals who had purchased green products from bulk stores in Bandung and Jakarta. The data were obtained through online surveys, specifically distributing G-form. The majority of respondents are women at 78.7% and 39.1% were aged between 26-35 years. Subsequently, the samples were collected using cluster random sampling, which included selecting groups or areas to be sampled, and the data were processed using SEM-LISREL. The results showed that green lifestyles influenced willingness to pay more for convenience goods, while attitudes were only indirectly influenced. The intention to make a purchase was a significant predictor of how much consumers were willing to pay more. The majority of respondents are willing to pay around 10-25% more for green products. Simultaneously, attitudes and green lifestyles had a significant influence, with purchase intention as a mediator. These results can be used to develop green convenience product marketing strategies at bulk stores in Indonesia by providing confidence in product attributes that encourage consumers to pay a premium price.

Penerapan Green Marketing pada Produk Bubble Wrap dalam Meningkatkan Purchase Intention dan Perceived Value

This study aims to determine the application of green marketing on OCUWRAP products and application of green marketing to increase purchase intention and perceived value. OCUWRAP is a biodegradable bubble wrap product made from cassava starch and dried sponge gourd. This research was conducted using an interview method with a descriptive qualitative approach. Data obtained from interviews conducted with marketing and development managers, cosmetic store owners, and consumers were processed using the triangulation method. This study found that green marketing implemented has increased purchase intention and perceived value of its products. The implementation of green marketing by OCUWRAP is carried out in various aspects, namely environmentally friendly products, premium prices and environmentally friendly marketing and distribution. The results of this study indicate that the green marketing strategy has increased purchase intention for the product. Green marketing that has been implemented can also increase the perceived value felt by OCUWRAP consumers.

Review of Capability of Methods for the Verification of Country of Origin for Food and Feed

Country of origin is defined as the country where food or feed is entirely grown, produced, or manufactured, or, if produced in more than one country, where it last underwent a substantial change. In the UK, EU-assimilated legislation states that indication of the country of origin is a mandatory labelling requirement for food and feed, including products such as meat, vegetables, eggs, honey and wine. The country of origin claim plays an important role for consumers who tend to relate certain country of origin labelling to superior quality or brand identity. Patriotism (or ethnocentrism) can also play a role in consumer food choice. In Europe, there are 3500 products with a specific geographical origin and their production methods are officially protected (Protected Designation of Origin = PDO; Protected Geographical Indication = PGI; Geographical Indication (for spirit drinks) = GI). These goods often carry a premium price. In addition to customer preference and sale price, country of origin claims are important to businesses when they seek to (i) monitor food miles (carbon footprint), (ii) ensure sustainable sourcing of, for example soy and palm oil (including new Regulation (EU) 2023/1115 on deforestation-free products), (iii) avoid trading of goods which are subject to sanctions, (iv) reassure consumers over concerns of farming and animal welfare standards, (v) avoid foods which are linked to exploitation of farm workers, enforced, or child labour. ‘Verification’ of geographical origin involves testing against a database to confirm that the data for a sample are consistent with those for that geographical location as claimed on a product label. Verification therefore does not involve testing a sample from an unknown location to unequivocally identify its provenance, as such methods are not available or are extremely limited in scope.

When Prominence Overrules EminenceSubsidization of the Cultural Sectors in the Netherlands

What processes determine the allocation of state subsidies to a selection of cultural and artistic organizations? In the case of the Dutch cultural basic infrastructure (BIS) two main criteria are issued, namely quality and reputation. In this article, no attempt is made to define measures for artistic quality and reputation. Instead, it is observed by which criteria decision makers, public media, and artistic leaders refer to these concepts. The way in which the selection and granting are performed shows striking similarity with processes described in the literature. First, the theory of social comparison asserts that people in a shared activity compare opinions and abilities in a strife for growth. When technical constraints and limits impede the progress in ability, effort and attention shift to opinions on abilities of the members. In this social dimension, growth is more easily attained. This decoupling results into stagnation and inferior learning processes. Second, in an implicit elaboration of the social comparison theory, a model is proposed in which perceived quality and prominence determine which organization will receive price premiums. Perceived quality is indicated by the quality of the inputs and productivity assets. Prominence origins from media rankings and elicited preferences of intermediary organizations and affiliation with high-status actors. Prominence has more bearing in social processes in the institutional field than on quality indicators. This model provides a base for reputation bias among stakeholders of organizations. The theoretical approaches have been operationalized into an analytical framework. The framework appears to offer a powerful and accurate instrument to describe and explain courses of action and outcomes in Dutch cultural sectors. In discussion, it is questioned if it is wise to base a subsidization policy on social comparison. The strive for prominence in the institutional fields tends to overrule the search for quality and eminence. It is recommended to reconsider social comparison processes by reduction of the arbitrariness in the performance assessment and evaluation. In this respect, promising and high-quality performers are supported in their access to large audiences. It is proposed that the framework can be applied in all situations where resources and performance opportunities are allocated to a selection of executing actors. Choices will be based on a mix of past and future performances. The situations suited for application may vary from philanthropy to hard core and non-profit sectors to private business industries.

Upright versus inverted catching and crating end-of-lay hens: a trade-off between animal welfare, ergonomic and financial concerns

This study explores upright versus inverted catching and crating of spent laying hens. Both catching methods were compared using a cost-benefit analysis that focused on animal welfare, ergonomic, and financial considerations. Data were collected on seven commercial farms (one floor system and six aviary systems) during depopulation of approximately 3,000 hens per method per flock. Parameters such as wing flapping frequency, catcher bird interaction, incidence of catching damage and hens dead on arrival (DOA) were measured and compared between catching methods. Ergonomic evaluations were performed via catcher surveys and expert assessment of video recordings. The wing flapping frequency was lower (3.1 ± 0.6 vs. 4.0 ± 0.5, P < 0.001) and handling was gentler (1.9 ± 0.5 vs. 4.4 ± 0.5, P < 0.001), both on a 7-point Likert scale, for upright versus inverted catching. However, more person-hours per 1000 hens were required for upright than inverted catching (8.2 ± 3.2 h vs. 4.8 ± 2.0 h, P = 0.011), with only wing bruises being significantly less common for upright than inverted catching (1.1 ± 0.6 % vs. 1.7 ± 0.7%, P = 0.04). Upright catching was 1.8 times more expensive than inverted catching; compensation for this cost would require a premium price of approximately €0.0005 extra per egg. Ergonomically, both catching methods were considered demanding, although catchers (n = 29) preferred inverted catching. In conclusion, this study showed animal welfare benefits of upright vs. inverted catching. Industry adoption of upright catching will depend on compensation of the additional labor costs, adjustments to labor conditions and shorter loading times.

Customer engagement, moral identity and oppositional brand loyalty in virtual communities

PurposeOppositional brand loyalty poses a challenge to the management of virtual communities. This study aims to categorize these loyalty behaviors into positive (willingness to pay a price premium and brand evangelism) and negative (schadenfreude and anti-brand actions) dimensions. It then explores how customer engagement and moral identity influence these dimensions in the context of brand competition.Design/methodology/approachStructural equation modeling was conducted to analyze the main and moderating effects, using survey data obtained from 498 valid responses out of a total of 636 responses from Xiaomi's virtual communities.FindingsThe results indicate that customer engagement significantly influences all four dimensions of oppositional brand loyalty. The relationship between customer engagement and brand evangelism is notably stronger among customers with a strong moral identity. Conversely, the effects of customer engagement on schadenfreude and anti-brand actions are attenuated for these customers.Originality/valueAnchored in theories of brand tribalism, social identity and brand polarization, this study bifurcates oppositional brand loyalty into directions of preference and antagonism, empirically showcasing moral identity's moderating effect. It contributes to the literature on antagonistic loyalty and moral identity, offering strategic insights for companies to navigate schadenfreude and anti-brand actions in online communities.

Effect of Social Media Marketing on Visit Intention and Willingness to Pay Premium Price for Ecotourism

Demand for ecotourism is increasing due to higher awareness of environmental damage and the hype in social media. To minimize over-tourism, the government is considering charging higher prices for ecotourism destinations that may cause a decline in the number of visitors. While the Theory of Planned Behavior (TPB) has been frequently used to explain tourists’ visit intention, it has not integrated the perceived social media marketing as the determinant of its antecedents and looked at the subsequent impact of visit intention, such as willingness to pay premium price. This study aims to examine the effect of perceived social media marketing on visit intention and willingness to pay premium price by using TPB as its theoretical basis and Komodo National Park as a study context. Data from 265 millennial and Generation Z tourists were tested using PLS-SEM that showed significant effects of perceived social media marketing on attitude toward the destination, subjective norms, and destination image, which together with perceived behavioral control subsequently affected visit intention. Finally, visit intention stimulates tourists’ willingness to pay a premium price to visit the destination.

Stackelberg differential reinsurance and investment game for a dependent risk model with Ornstein–Uhlenbeck process

This paper considers a reinsurance and investment problem under the Stackelberg differential game. It assumes that the insurer can purchase reinsurance and the claim businesses between the insurer and the reinsurer are correlated through common shock dependence, and both of them are allowed to invest in a common risky asset whose price follows an Ornstein–Uhlenbeck process. By the stochastic control theory, explicit expressions of the optimal controls and the value functions are obtained for both of the insurer and reinsurer. We show that the optimal reinsurance strategy is a constant, which is independent of the time and risk-free interest rate. We also show that compared with the independent model, the insurer will purchase less reinsurance and the reinsurer will increase the premium price under the dependent risk model.

Optimal management plans and initiatives for the valorization and safeguarding of local breeds: a mathematical programming approach

In this study, a parametric programming model was developed in order to deliver optimal management plans for various types of farms rearing endangered Greek sheep breeds under three distinct scenarios. The first scenario investigated the optimal internal organization of farms (i.e., management practices and resource allocation strategies that increase profitability of farms) under current market conditions (e.g., product prices) without, however, considering subsidies and compensations. The second assessed the impact of an agri-environmental support scheme on farm optimal structure and socioeconomic performance. The third investigated the effects of integrating farms into value chains and niche markets where premium prices prevail. For this purpose, a questionnaire survey was conducted in the wider region of Epirus and Thessaly, collecting management data from 16 farms rearing (i) Kalaritiko, (ii) Orino Epiru and (iii) Katsika rare sheep breeds. The main finding of this study was that the optimal internal organization of farms is essential for their self-reliance and viability. Therefore, it should be the basis in the designing of any initiative aimed at the preservation and valorization of local breeds. Furthermore, the analysis showed that a niche marketing strategy (i.e., a premium price strategy) can have a broader positive impact on farms structure and socioeconomic performance, particularly those engaged in cheese production, compared to an agri-environmental scheme. However, due to the fact that both initiatives possess limitations that may render them inefficient under specific external conditions, the development of an integrated incentive mechanism, which will combine both policy schemes and market-based initiatives, appeared to be a more effective strategy for the long-term viability of farms.

Advances in Vertical Farming: Opportunities and Challenges

Vertical farming has emerged as a promising solution to address the challenges of food security, sustainability, and urbanization in the 21st century. This innovative approach to agriculture involves growing crops in vertically stacked layers within controlled environments, optimizing space, resources, and yields. Vertical farming represents a significant innovation in agriculture, designed to meet the challenges of urban food production with enhanced efficiency and sustainability. This study examines recent technological advancements in vertical farming, emphasizing methods such as automation. By growing crops in vertically stacked layers within controlled environments, vertical farming maximizes space utilization and minimizes resource consumption. The results indicate substantial improvements in crop yields and quality, along with reduced water and pesticide use. Additionally, the proximity of vertical farms to urban centers shortens supply chains, lowering transportation costs and carbon emissions. The discussion highlights the economic benefits, including year-round production and premium pricing for pesticide-free produce, alongside the challenges of high initial investments and energy demands. The environmental impacts are also considered, noting significant reductions in land use and water consumption compared to traditional farming. This review underscores the potential of vertical farming to contribute to global food security and sustainable urban development, while addressing the need for further research and collaboration to overcome existing barriers. The findings suggest that continued innovation and supportive policies are crucial for the widespread adoption and success of vertical farming practices.

Vietnamese consumers' willingness to pay for improved food safety for vegetables and pork

AbstractFood safety is an issue of growing concern in many developing countries. Threats to food safety in Vietnam include contamination with toxic chemicals, microbiological hazards and adulterated food. To determine Vietnamese consumers' willingness to pay for food safety of pork and vegetables, a discrete choice experiment was employed in the cities of Hanoi and Haiphong. Principal factor analysis and mixed logit models reveal that urban consumers are, on average, willing to pay considerable price premiums for food safety attributes. On average, consumers are willing to pay a price premium of 244% for vegetables produced with the safe application of pesticides, 70% premium for pork processed in certified abattoirs that assure pork safety and 67% price premium for pork if the convenience attribute is satisfied. Regarding vegetables, there is considerable heterogeneity in the extent to which consumers are willing to pay for growth‐hormone‐free vegetables, depending on their education, and in perceptions towards food safety risks resulting from chemical hazards and foodborne illness in Vietnam. For pork, if consumers believe that contaminated food could cause life‐threatening risks for people, they are willing to pay up to 102% more than the current market price for hormone‐free and drug‐free pork. The factor representing consumers' trust in food safety influences their WTP for traceability and clean water attributes. Moreover, consumer's self‐health evaluation influenced their WTP for pork traceability. Almost all consumers prefer the convenience of being able to purchase vegetables and pork nearby.

The effect of avian influenza outbreaks on retail price premiums in the United States poultry market

This study analyzes the effect of avian influenza outbreaks on retail price premiums in the US poultry market. We estimate hedonic price models for eggs, chickens, and turkeys, controlling for quality characteristics, unobserved time, and regional factors. To measure the impact of avian influenza outbreaks we use 2 proxies. The first proxy is a measure of the number of new bird infections at the production level. The second proxy measures online search queries related to the outbreak. The results show that, on average, prices increase across product categories, that is, egg, broiler, and turkey markets, during avian influenza outbreaks. Furthermore, we observe price convergence and reduced dispersion within product categories, which is consistent with the economic theory of asymmetric substitutability between conventional and premium products. Our analysis finds that the HPAI outbreak caused a reduction of the price gap between conventional and premium products.

Returns to solar panels in the housing market: A meta learner approach

This paper aims to estimate the returns to solar panels in the UK residential housing market. Our analysis applies a causal machine learning approach to Zoopla property data containing about 5 million observations. Drawing on meta-learner algorithms, we provide strong evidence documenting that solar panels are directly capitalized into sale prices. Our results point to a selling price premium above 6% (range between 6.1% to 7.1% depending on the meta-learner) associated with solar panels. Considering that the average selling price is £230,536 in our sample, this corresponds to an additional £14,062 to £16,368 selling price premium for houses with solar panels. Our results are robust to traditional hedonic pricing models and matching techniques, with the lowest estimates at 3.5% using the latter. Despite the declining trend, the additional analyses demonstrate that the positive premium associated with solar panels persists over the years.

Returns to quality in rural agricultural markets: Evidence from wheat markets in Ethiopia

In many Sub-Saharan countries, farmers cannot meet the growing urban demand for higher quality products. While the literature has focused on production-side constraints to enhance smallholder farmers’ output quality, there is scarce evidence of market-side constraints. Using a sample of 60 wheat markets in Ethiopia, I assess whether farmers received a price premium for supplying higher quality outputs. I exploit a unique feature of the data which precisely measures observable and less or unobservable quality attributes, and relate them to transaction prices. Observable attributes cannot serve as proxies for less observable ones. Transaction prices further reflect this, indicating that markets only reward quality attributes that are observable at no cost. However, these results hide cross-market heterogeneity. Farmers engage in relational contracts receive a higher price but similar rewards for quality. Observable quality attributes are better rewarded in markets with more traders per farmer, while unobservable attributes are rewarded in the presence of other value chain actors (i.e., grain millers and farmer cooperatives). Both regression and machine learning approaches support these findings.

Projecting the impact of climate change on honey bee plant habitat distribution in Northern Ethiopia

Climate change significantly affects the diversity, growth, and survival of indigenous plant species thereby influencing the nutrition, health and productivity of honey bees (Apis mellifera). Hypoestes forskaolii (Vahl) is one of the major honey bee plant species in Ethiopia’s Tigray region. It is rich in pollen and nectar that typically provides white honey, which fetches a premium price in both local and inter-national markets. Despite its socio-economic and apicultural significance, the distribution of H. forskaolii has been declining, raising concerns regarding its conservation efforts. However, there is limited knowledge on how environmental and climatic factors affect its current distribution and response to future climate change. The study investigates the current and projected (the 2030s, 2050s, 2070s, and 2090s) habitat distributions of H. forskaolii under three future climate change scenarios (ssp126, ssp245, and ssp585) using the Maximum Entropy Model (MaxEnt). The results show that land use (50.1%), agro-ecology (28%), precipitation during the Driest Quarter (11.2%) and soil texture (6.1%) predominantly influence the distribution of H. forskaolii, collectively explaining 95.4% of the model's predictive power. Habitats rich in evergreen trees and mosaic herbaceous with good vegetation cover are identified as the most suitable for H. forskaolii. The spatial distribution of H. forskaolii is concentrated in the highlands and mid-highlands of the eastern and southern parts of Tigray, characterized by a colder temperature. Across the three climate change scenarios, the size of suitable habitat for H. forskaolii is projected to decrease over the four time periods studied. Predictions under the ssp585 scenario reveal alarming results, indicating a substantial decrease in the suitable habitat for H. forskaolii from 4.26% in the 2030s to 19.09% in the 2090s. Therefore, given the challenges posed by climate change, research efforts should focus on identifying and evaluating new technologies that can help the H. forskaolii species in adapting and mitigating the effects of climate change.