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Households' Willingness to Pay for “Green” Goods: Evidence from Patagonia's Introduction of Organic Cotton Sportswear

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  • Ramon Casadesus‐Masanell
  • Michael Crooke
  • Forest Reinhardt
  • Vishal Vasishth

Abstract

To shed light on individuals' willingness to pay for “green” goods (i.e., goods that are supposed to have lower adverse environmental impacts either in production or in use), we study data from the introduction by Patagonia, Inc., of organic cotton sportswear in the mid‐1990s. Patagonia, a maker of high‐end outdoor wear, substituted organic cotton for conventionally grown cotton in all of its sportswear (i.e., casual clothing for travel and leisure) in 1996. We find that customers were willing to pay significant premiums for organic cotton garments although the organic cotton provided no demonstrable private incremental benefits to the customer.

Suggested Citation

  • Ramon Casadesus‐Masanell & Michael Crooke & Forest Reinhardt & Vishal Vasishth, 2009. "Households' Willingness to Pay for “Green” Goods: Evidence from Patagonia's Introduction of Organic Cotton Sportswear," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(1), pages 203-233, March.
    • Handle: RePEc:bla:jemstr:v:18:y:2009:i:1:p:203-233
    DOI: 10.1111/j.1530-9134.2009.00212.x
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    References listed on IDEAS

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    3. Maguire, Kelly B. & Owens, Nicole N. & Simon, Nathalie B., 2004. "The Price Premium for Organic Babyfood: A Hedonic Analysis," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 29(01), pages 1-18, April.
    4. Yvon Chouinard & Michael S. Brown, 1997. "Going Organic: Converting Patagonia's Cotton Product Line," Journal of Industrial Ecology, Yale University, vol. 1(1), pages 117-129, January.
    5. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 249-275.
    6. Kotchen, Matthew J., 2005. "Impure public goods and the comparative statics of environmentally friendly consumption," Journal of Environmental Economics and Management, Elsevier, vol. 49(2), pages 281-300, March.
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