Promoting Demand for Organic Food Under Preference and Income Heterogeneity

Essi Eerola and Anni Huhtala

No 24664, 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark from European Association of Agricultural Economists

Abstract: We examine the design of policies for promoting the consumption of green products under preference and income heterogeneity using organic products as an example. Two instruments are considered: a price subsidy for the organic products and a tax on the conventional products. Under income disparity, consumers with high income always prefer a socially optimal subsidy to a socially optimal tax, while low-income consumers prefer a tax on conventional products. When environmental policy is determined by the median voter, the policies implemented tend to be stricter than socially optimal policies if income differences are large.

Keywords: Demand and Price Analysis; Food Consumption/Nutrition/Food Safety (search for similar items in EconPapers)
Pages: 19
Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:ags:eaae05:24664

DOI: 10.22004/ag.econ.24664

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