The Impact of Social Preferences and Information on the Willingness to Pay for Fairtrade Products

Robert Hellwig (), Ayse Atasoy and Reinhard Madlener
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Robert Hellwig: RWTH Aachen University, Postal: RWTH Aachen University, Templergraben 55, 52056 Aachen, Germany, https://www.rwth-aachen.de

No 6/2020, FCN Working Papers from E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)

Abstract: This paper investigates the impact of social preferences and information about the value chain on the willingness to pay (WTP) for Fairtrade products. More specifically, the perceived social and economic benefits for Fairtrade farmers are analyzed in order to study whether altruistic preferences or information biases may shift consumers’ WTP. By means of an online survey, the empirical analysis is carried out for the coffee market. After grouping and comparing participants with respect to their WTP, social preferences, and demographic backgrounds, we find some evidence that consumers wrongly estimate, and lack information on, the financial benefits of Fairtrade certification that are eventually allocated to the coffee farmers. Large multinational enterprises often seem to make use of the Fairtrade system in order to gain financial and competitive advantages by “fairwashing” their products. This demonstrably leads to a higher WTP for an ethical premium that is not necessarily justified.

Keywords: Social preferences; Willingness to pay; Fairtrade; Coffee market; Tobit model (search for similar items in EconPapers)
JEL-codes: D63 D83 O13 Q01 Q56 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2020-05
New Economics Papers: this item is included in nep-agr, nep-dcm and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:fcnwpa:2020_006

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