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willingness to pay thesis

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We may contact You by telephone, postal mail, e-mail, or other methods. You may see advertisements when You visit our Website. Compared to other trade, the goods passes through remarkably few hands on its way from suppliers to consumers.

This also applies to the money on its way from consumers to a poor farmer. FT creates long-term relationships between purchasers and producers, which allows producers to plan ahead and invest in the future e. FT fosters purchaser-producer relationships based on mutual respect. This enables farmers to pre-finance production without the necessity to raise a loan with high rates. Full information about market movement and about how the market price of a good is determined in the different transactions.

Resource management plans are required. Moreover, certain pesticides are prohibited and farmers are fostered to invest in organic certification. No labor abuses may occur during the production process. This also includes the prohibition of child and slave labor abuse.

Hence, Fair Trade may be broadly characterized as the market-based approach to help producers in improving their living condition by building a fair trade conditions. FT guarantees prices above the cost of production, promotes sustainability, enables investments and business development through the long-term trading relationship, improves working conditions, and fosters social responsibility.

According to Nicholls and Opal , the growth of Fair Trade can be seen as developing in four waves. Charities in Western Europe e.

Similarly, in the Unites States, Ten Thousand Villages formerly Self Help Crafts started buying needlework from Puerto Rico in order to accelerate their economic growth and decrease poverty. In the second wave , market-oriented alternative trading organizations ATOs arose with the aim to stimulate beneficial trade models for producers in developing countries, for example by offering trade conditions without the control of middlemen who would inevitably squeeze prices at the beginning of the supply chain cf.

However, the sales volume of FT products was rather small as they were sold mostly in catalogues and world shops during this period.

The third wave was characterized by promoting FT products to a larger consumer base. During the same period, FT also managed to attract attention at international political fora and established FT certification marks. The certification guaranteed that a labeled product meets basic environmental and labor standards, and simplified the interface between producers and customers. From that period onwards, moving into the fourth wave , FT hardened its growth in the mainstream.

Over the last ten years, there has been a huge increase of FT sales internationally see Figure 1. Global sales of FT products almost tripled between and Krier, The worldwide turnover exceeded 2. Nowadays, there are over 2, certified producer organizations and partner organization worldwide and FT products are sold in countries. Hence, FT is no longer a niche market Bauer et al. In Germany, FT products are sold in more than specialist shops so-called "world shops" as well as in conventional stores like Aldi, Tengelmann, or Rewe.

The price-premium represented over 3 million Euros. The growth of the overall sales volume in Germany is similar to the developmental trends observed worldwide.

Figure 5 presents the sales volume of FT products in the last decade. The overall turnover of FT products increased over eight times since , and more and more certified products are being sold. Thus, as in other European countries, FT market continues to grow. However, FT certification and labeling are linked to enhanced costs e.

Consequently, the prices are higher than those of free trade products Bauer et al. The present thesis addresses the willingness to pay for FT products.

As discussed above, FT products are often more expensive than similar conventional products. Hence, the question arises whether consumers are willing to pay the enhanced price and which highest amount of the price-premium they would accept. It may be expected that this number significantly increased in the last decade due to the improvement of FT awareness and FT acceptance. The first purpose of the present thesis therefore is to analyze the WTP for FT products as estimated in the most current empirical research studies.

However, there may be discrepancies between the claimed and the actual purchase behavior; some people might claim that they would be willing to pay a premium but they do not behave accordingly. Nicholls and Lee indeed discuss that only a minority of consumers that describe themselves as willing to pay for FT products actually purchase those products.

Therefore, the increased WTP as estimated in interviews and surveys need not predict an actual buying behavior. On the other side, the discussed attitude-behavior gap seems to contradict the sales volume increase in the last years see the previous section. The turnover increase indicates that consumers are not only willing but also actually purchase FT products. Perhaps the most evidence on actual behavior comes from related field experiments.

For example, Prasad et al. The results showed that Similarly, Hiscox and Smyth carried out a field experiment in a major New York City retail store.

They picked two brands of towels and two brands of candles that were labeled as being produced under good working conditions. The researchers first recorded the weekly sales of the towels and candles without labeling any of them. These findings have been supported by the most current field experiment performed by Bauer et al. Similarly to Hiscox and Smyth , Bauer et al. For example, Auger et al. Similarly, Basu and Hicks found that WTP exhibits an inverted U shape in the sense that people are willing to pay a premium, but only up to a critical price level.

The second purpose of the present thesis therefore is to specify how much extra people are willing to pay for FT products. Why should some individuals be more concerned than others to purchase FT products? To allow identifying possible factors, two main theoretical approaches - economic approach and social psychological approach - will be discussed cf. Within the budget restriction, the consumer purchases the product alternative that brings the highest utility per cost unit.

Given that FT features for the consumer buying FT products are important, this person gain additional utility from these features and hence purchase the product. Consequently, product price and income should represent significant factors influencing WTP for FT products. The product price deserves mention. In general, the higher price the less WTP.


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CONSUMERS’ WILLINGNESS TO PAY USING AN EXPERIMENTAL AUCTION METHODOLOGY: APPLICATIONS TO BRAND EQUITY. By. YAN-MING LI. A thesis submitted in partial fulfillment of.

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Generally, about half of the households surveyed are willing to pay for better drinking water. Most of them are HHs living in two major cities, Hanoi and Ho Chi Minh City. On average for all of the sampled households, the value of willingness-to-pay makes up small percentage of household income, just % of total household income. product perceptions either negatively or giasifane.ga addition, the willingness to pay (WTP) literature stipulates that WTP is determined by product attributes and individuals’ characteristics. This thesis therefore seeks to ascertain the factors affecting consumers’ preferences and WTP for.

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