IDEAS home Printed from https://ideas.repec.org/a/wly/agribz/v33y2017i2p160-174.html
   My bibliography  Save this article

What's in a Name? The Impact of Fair Trade Claims on Product Price

Author

Listed:
  • Nicholas G. Marconi
  • Neal H. Hooker
  • Nicholas DiMarcello III

Abstract

ABSTRACT Agribusinesses use credence claims reporting the sustainability of products and supply chains. One example, fair trade, relies on a diverse set of third party standards and certification organizations. Food marketing data are used to compare products launched between 1999 and 2013 in the coffee, tea, and chocolate categories. Out of 3,257 observations making a reference to fair trade, 2,745 were certified. The other items follow certain fair trade practices or support fair trade. Many products claim both fair trade and organic (congruent claim). Fairtrade Labeling Organizations – International (FLO‐I) certifiers dominate, but Fair Trade USA (breaking from FLO‐I in 2012) is important. A double hurdle hedonic regression model explores the relationship between claims and suggested retail price in the United States, Canada, and European Union over two periods (1999–2011 and 2012–2013). Two models are run, one aggregating non‐FLO‐I members and one accounting for each individual certifier. The models (first hurdle) are not able to identify factors explaining which products are certified. Results suggest (second hurdle) that after controlling for congruent claims, having a fair trade claim certified by certain third parties significantly raises the price (above an uncertified product). In particular FLO‐I certification leads to a higher price in all models in both periods. Conversely, there is a range of premia for non‐FLO‐I certifiers, not all statistically significant. Implications for stakeholders are advanced. [EconLit citations: D40, L15, L66].

Suggested Citation

  • Nicholas G. Marconi & Neal H. Hooker & Nicholas DiMarcello III, 2017. "What's in a Name? The Impact of Fair Trade Claims on Product Price," Agribusiness, John Wiley & Sons, Ltd., vol. 33(2), pages 160-174, April.
    • Handle: RePEc:wly:agribz:v:33:y:2017:i:2:p:160-174
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1002/agr.21486
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Martínez-Garmendia, Josué, 2010. "Application of hedonic price modeling to consumer packaged goods using store scanner data," Journal of Business Research, Elsevier, vol. 63(7), pages 690-696, July.
    2. Rousu, Matthew C. & Corrigan, Jay R., 2008. "Consumer Preferences for Fair Trade Foods: Implications for Trade Policy," Choices: The Magazine of Food, Farm, and Resource Issues, Agricultural and Applied Economics Association, vol. 23(2), pages 1-3.
    3. repec:ken:wpaper:0803 is not listed on IDEAS
    4. T. Robert Fetter & Julie A. Caswell, 2002. "Variation in Organic Standards Prior to the National Organic Program," Food Marketing Policy Center Research Reports 072, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    5. repec:feb:framed:0080 is not listed on IDEAS
    6. Grossman, Sanford J, 1981. "The Informational Role of Warranties and Private Disclosure about Product Quality," Journal of Law and Economics, University of Chicago Press, vol. 24(3), pages 461-483, December.
    7. Weber, Jeremy G., 2011. "How much more do growers receive for Fair Trade-organic coffee?," Food Policy, Elsevier, vol. 36(5), pages 677-684, October.
    8. Peter Griffiths, 2014. "Fairtrade: Comment On Tedeschi And Carlson," Journal of International Development, John Wiley & Sons, Ltd., vol. 26(2), pages 277-289, March.
    9. Martin Spann & Marc Fischer & Gerard J. Tellis, 2015. "Skimming or Penetration? Strategic Dynamic Pricing for New Products," Marketing Science, INFORMS, vol. 34(2), pages 235-249, March.
    10. Daniel Jaffee & Philip Howard, 2010. "Corporate cooptation of organic and fair trade standards," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 27(4), pages 387-399, December.
    11. Richard Carew & Wojciech J. Florkowski & Elwin G. Smith, 2012. "Hedonic Analysis of Apple Attributes in Metropolitan Markets of Western Canada," Agribusiness, John Wiley & Sons, Ltd., vol. 28(3), pages 293-309, June.
    12. Patrice Cailleba & Herbert Casteran, 2010. "Do Ethical Values Work? A Quantitative Study of the Impact of Fair Trade Coffee on Consumer Behavior," Journal of Business Ethics, Springer, vol. 97(4), pages 613-624, December.
    13. Cragg, John G, 1971. "Some Statistical Models for Limited Dependent Variables with Application to the Demand for Durable Goods," Econometrica, Econometric Society, vol. 39(5), pages 829-844, September.
    14. Lindsay Naylor, 2014. "“Some are more fair than others”: fair trade certification, development, and North–South subjects," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 31(2), pages 273-284, June.
    15. Peter Griffiths, 2012. "Ethical Objections to Fairtrade," Journal of Business Ethics, Springer, vol. 105(3), pages 357-373, February.
    16. Laura Raynolds, 2014. "Fairtrade, certification, and labor: global and local tensions in improving conditions for agricultural workers," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 31(3), pages 499-511, September.
    17. Lawrence Busch, 2011. "The private governance of food: equitable exchange or bizarre bazaar?," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 28(3), pages 345-352, September.
    18. Gwendolyn A. Tedeschi & Julie A. Carlson, 2013. "Beyond The Subsidy: Coyotes, Credit And Fair Trade Coffee," Journal of International Development, John Wiley & Sons, Ltd., vol. 25(4), pages 456-473, May.
    19. Hanemann, W Michael, 1991. "Willingness to Pay and Willingness to Accept: How Much Can They Differ?," American Economic Review, American Economic Association, vol. 81(3), pages 635-647, June.
    20. Michael Maloni & Michael Brown, 2006. "Corporate Social Responsibility in the Supply Chain: An Application in the Food Industry," Journal of Business Ethics, Springer, vol. 68(1), pages 35-52, September.
    21. Rosella Levaggi & Eugenio Brentari, 2014. "The Hedonic Price for Italian Red Wine: Do Chemical and Sensory Characteristics Matter?," Agribusiness, John Wiley & Sons, Ltd., vol. 30(4), pages 385-397, September.
    22. Jens Hainmueller & Michael J. Hiscox & Sandra Sequeira, 2015. "Consumer Demand for Fair Trade: Evidence from a Multistore Field Experiment," The Review of Economics and Statistics, MIT Press, vol. 97(2), pages 242-256, May.
    23. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
    24. repec:bla:manchs:v:68:y:2000:i:2:p:203-21 is not listed on IDEAS
    25. Hoehn, John P. & Randall, Alan, 1987. "A satisfactory benefit cost indicator from contingent valuation," Journal of Environmental Economics and Management, Elsevier, vol. 14(3), pages 226-247, September.
    26. Ching‐Hsing Chang & Neal H. Hooker & Eugene Jones & Abdoul Sam, 2011. "Organic and conventional milk purchase behaviors in Central Ohio," Agribusiness, John Wiley & Sons, Ltd., vol. 27(3), pages 311-326, June.
    27. P G Moffatt, 2005. "Hurdle models of loan default," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 56(9), pages 1063-1071, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Magdalena Kapelko & Alfons Oude Lansink & Encarna Guillamon‐Saorin, 2021. "Corporate social responsibility and dynamic productivity change in the US food and beverage manufacturing industry," Agribusiness, John Wiley & Sons, Ltd., vol. 37(2), pages 286-305, April.
    2. Jasper Grashuis & Alexandre Magnier, 2018. "Product differentiation by marketing and processing cooperatives: A choice experiment with cheese and cereal products," Agribusiness, John Wiley & Sons, Ltd., vol. 34(4), pages 813-830, October.
    3. Dolores Garrido & Ana Espínola‐Arredondo & Felix Munoz‐Garcia, 2020. "Can mandatory certification promote greenwashing? A signaling approach," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(6), pages 1801-1851, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Durevall, Dick, 2015. "Are Fairtrade Prices Fair? An Analysis of the Distribution of Returns in the Swedish Coffee Market," HUI Working Papers 108, HUI Research.
    2. Richard T. Carson, 2011. "Contingent Valuation," Books, Edward Elgar Publishing, number 2489.
    3. Oya, Carlos & Schaefer, Florian & Skalidou, Dafni, 2018. "The effectiveness of agricultural certification in developing countries: A systematic review," World Development, Elsevier, vol. 112(C), pages 282-312.
    4. Veronika A. Andorfer & Ulf Liebe, 2014. "Do Information, Price, or Morals Influence Ethical Consumption? A Natural Field Experiment and Customer Survey on the Purchase of Fair Trade Coffee," University of Bern Social Sciences Working Papers 6, University of Bern, Department of Social Sciences.
    5. Hsu, Bo-Xiang & Chen, Yi-Min & Chen, Li-An (Leann), 2022. "Corporate social responsibility and value added in the supply chain: Model and mechanism," Technological Forecasting and Social Change, Elsevier, vol. 174(C).
    6. Durevall, Dick, 2017. "Who Benefits from Fairtrade? Evidence from the Swedish Coffee Market," Working Papers in Economics 708, University of Gothenburg, Department of Economics.
    7. Dick Durevall, 2020. "Fairtrade and Market Efficiency: Fairtrade-Labeled Coffee in the Swedish Coffee Market," Economies, MDPI, vol. 8(2), pages 1-17, April.
    8. Ginger Zhe Jin & Andrew Kato & John A. List, 2010. "That’S News To Me! Information Revelation In Professional Certification Markets," Economic Inquiry, Western Economic Association International, vol. 48(1), pages 104-122, January.
    9. Villas-Boas, Sofia B, 2020. "Reduced Form Evidence on Belief Updating Under Asymmetric Information," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt08c456vk, Department of Agricultural & Resource Economics, UC Berkeley.
    10. Haisken-DeNew, John & Hasan, Syed & Jha, Nikhil & Sinning, Mathias, 2018. "Unawareness and selective disclosure: The effect of school quality information on property prices," Journal of Economic Behavior & Organization, Elsevier, vol. 145(C), pages 449-464.
    11. repec:hum:wpaper:sfb649dp2014-041 is not listed on IDEAS
    12. Erica Mina Okada, 2010. "Uncertainty, Risk Aversion, and WTA vs. WTP," Marketing Science, INFORMS, vol. 29(1), pages 75-84, 01-02.
    13. Richard T. Carson & Miko_aj Czajkowski, 2014. "The discrete choice experiment approach to environmental contingent valuation," Chapters, in: Stephane Hess & Andrew Daly (ed.), Handbook of Choice Modelling, chapter 9, pages 202-235, Edward Elgar Publishing.
    14. Sini Forssell & Leena Lankoski, 2015. "The sustainability promise of alternative food networks: an examination through “alternative” characteristics," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 32(1), pages 63-75, March.
    15. Mehran, Hamid & Stulz, Rene M., 2007. "The economics of conflicts of interest in financial institutions," Journal of Financial Economics, Elsevier, vol. 85(2), pages 267-296, August.
    16. Junhong Chu & Pradeep K. Chintagunta, 2009. "Quantifying the Economic Value of Warranties in the U.S. Server Market," Marketing Science, INFORMS, vol. 28(1), pages 99-121, 01-02.
    17. W. Bentley MacLeod, 2006. "Reputations, Relationships and the Enforcement of Incomplete Contracts," CESifo Working Paper Series 1730, CESifo.
    18. B. Charumathi & Latha Ramesh, 2020. "Impact of Voluntary Disclosure on Valuation of Firms: Evidence from Indian Companies," Vision, , vol. 24(2), pages 194-203, June.
    19. Seth Freedman & Ginger Zhe Jin, 2008. "Do Social Networks Solve Information Problems for Peer-to-Peer Lending? Evidence from Prosper.com," Working Papers 08-43, NET Institute.
    20. Mingfeng Lin & Nagpurnanand R. Prabhala & Siva Viswanathan, 2013. "Judging Borrowers by the Company They Keep: Friendship Networks and Information Asymmetry in Online Peer-to-Peer Lending," Management Science, INFORMS, vol. 59(1), pages 17-35, August.
    21. Müller, Raphael & Spengel, Christoph & Vay, Heiko, 2020. "On the determinants and effects of corporate tax transparency: Review of an emerging literature," ZEW Discussion Papers 20-063, ZEW - Leibniz Centre for European Economic Research.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:agribz:v:33:y:2017:i:2:p:160-174. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1520-6297 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.