Consumer Willingness-to-Pay for Local Produce: The Case of New York Broccoli
The supply of broccoli has been highly concentrated in the West Coast. Considering the long supply chain from the West Coast to the East Coast and the large volume being shipped, it is beneficial to create a regional supply of broccoli in the East Coast. New varieties of broccoli have been developed recently to address the quality issues of the existing Eastern varieties. The success of the new varieties could accelerate the development of the East Coast broccoli industry. Our study assessed the product attributes of the new varieties and elicited consumer willingness to pay for these products to estimate their market potential. A non-hypothetical experimental auction was used, combined with an information treatment on product origin. Multiple rounds of bidding were designed to identify the effect of taste on consumer willingness to pay. A market share simulation was conducted to draw implications for pricing strategies. The results suggest a strong market potential for one of the Eastern varieties. A potential price premium against the West Coast product could be justified when product origin information is provided and when consumers have the opportunity to taste the product. Market share simulations confirm the potential for the price premium and suggest an optimal price within a range of 25 cents from the West Coast product.
Experimental auction; Consumer willingness to pay; Eastern broccoli; Market share simulation; Agriculture economics
Gomez, Miguel I.
Kaiser, Harry Mason
Applied Economics and Management
M.S., Applied Economics and Management
Master of Science
dissertation or thesis