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Global Social Preferences and the Demand for Socially Responsible Products: Empirical Evidence from a Pilot Study on Fair Trade Consumers
Author(s) -
Becchetti Leonardo,
Rosati Furio Camillo
Publication year - 2007
Publication title -
world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/j.1467-9701.2007.01012.x
Subject(s) - purchasing , consumption (sociology) , economics , fair trade , product (mathematics) , income elasticity of demand , sample (material) , willingness to pay , food products , microeconomics , international trade , food science , social science , chemistry , geometry , mathematics , chromatography , sociology , operations management
We analyse behaviour and motivations of a sample of about 1,000 consumers purchasing ‘fair trade (FT) goods’, i.e. food and artisan goods which include socially responsible (SR) characteristics and a price premium for primary product producers with respect to equivalent non‐FT products. By estimating a simultaneous two‐equation treatment effect model we find that FT products have less than unit of income elasticity and their demand is negatively (positively) correlated with geographical distance from the nearest shop (age and awareness of SR criteria). Awareness of SR criteria depends, in turn, on a series of factors (consumption habits, membership of volunteer associations) which, indirectly (via increased awareness), significantly affect consumption. We also measure consumers’ willingness to pay in excess for the SR features of FT products with a contingent evaluation approach and find that it is positively correlated with awareness of SR criteria.