Effect on Consumers' Willingness to Pay on "Local" Information for Strawberries

Abstract

This paper conducts an economic experiment to analyze the effect of “locally grown” information on consumers’ willingness to pay (WTP) and perception of quality for three types of strawberries (one California grown and two New York State grown). We use a Becker-DeGroot-Marschak (BDM) auction to elicit consumers’ WTP and use preference rating to examine their quality perception. The results show that consumers are willing to pay a price premium when they know the strawberries are “locally grown” (NYS grown) even when NYS grown strawberries are not rated as highly based solely on their look or taste without the local information. The motivation of this study is to examine whether regional local produce can compete with those from a single region which dominates nation production, providing insights for members in the food supply chain.