title: Estimating organic, local, and other price premiums in the Hawaii fluid milk market.
abstract: With retail scanner data, we applied hedonic price modeling to explore price premiums for organic, local, and other product attributes of fluid milk in Hawaii. Within the context of revealed preference, this analysis of organic and local attributes, under a single unified framework, is significant, as research in this area is deficient in the existing literature. This paper finds both organic and local attributes delivered price premiums over imported, conventional, whole fluid milk. However, the estimated price premium for organic milk (24.6%) is significantly lower than findings in the existing literature. Likewise, the price premium for the local attribute is estimated at 17.4%, again substantially lower compared with an earlier, stated preference study in Hawaii. Beyond that, we estimated a robust price premium of 19.7% for nutritional benefits claimed. The magnitude of this estimated coefficient reinforces the notion that nutrition information on food is deemed beneficial and valuable. Finally, package size measures the influence of product weight. With each larger package size, the estimate led to a corresponding larger price discount. This result is consistent with the practice of weight discounting that retailers usually offer with fresh packaged food. Additionally, we estimated a fairly high Armington elasticity of substitution, which suggests a relatively high degree of substitution between local and imported fluid milk when their relative price changes. Overall, this study establishes price premiums for organic, local, and nutrition benefits claimed for fluid milk in Hawaii.
authors.affiliation: Department of Natural Resources and Environmental Management, University of Hawaii at Mānoa, Honolulu 96822; Hawaii Department of Agriculture, Agricultural Development Division, Honolulu 96814.
authors.forename: Matthew K
authors.initials: MK
authors.lastname: Loke
authors.affiliation: Department of Natural Resources and Environmental Management, University of Hawaii at Mānoa, Honolulu 96822; Department of Economics, University of Hawaii at Mānoa, Honolulu 96822.
authors.forename: Xun
authors.initials: X
authors.lastname: Xu
authors.affiliation: Department of Natural Resources and Environmental Management, University of Hawaii at Mānoa, Honolulu 96822. Electronic address: psleung@hawaii.edu.
authors.forename: PingSun
authors.initials: P
authors.lastname: Leung
mesh_terms: D000818:Animals; D002417:Cattle; D005502:Food / Q000191:economics; D006254:Hawaii; D008892:Milk / Q000191:economics*
keywords: fluid milk; hedonic price model; local attribute; organic; scanner data