Comparing Parts with the Whole: Willingness to Pay for Pesticide-Free, Non-GM, and Organic Potatoes and Sweet Corn
By: Bernard, John C.; Bernard, Daria J.
Bernard, John C.; Bernard, Daria J., Comparing Parts with the Whole: Willingness to Pay for Pesticide-Free, Non-GM, and Organic Potatoes and Sweet Corn, Journal of Agricultural and Resource Economics, Volume 35, Issue 3, December 2010, Pages 457-475
Auction experiments were used to investigate demand relationships and willingness to pay (WTP) for four versions of potatoes and sweet corn—conventional, organic, and two parts of organic: no pesticides and non-genetically modified (non-GM). Elasticities showed strong and asymmetric substitute relationships between organic and its parts. Combined premiums of the parts were not significantly different than the whole organic premium, suggesting WTP for the attributes are not additive. A two-stage heteroskedastic tobit model found significant WTP for each part dependent on demographics and beliefs about conventional versions. Results suggest segments for parts of organic could be established alongside the whole.