Are consumers willing to pay for quality european food labelling? a choice experiment approach

Abstract

This paper analyses consumer preferences for European food quality labels. With the extra virgin olive oil as a case study, the Protected Designation of Origin (PDO) and the EU organic production labels are assessed in order to know if consumers are willing to pay higher prices for them, and whether these European food labels are complementarians or substitutes. A choice experiment designed to estimate twoway interactions was used. Data was gathered from a self-administrated survey in Spain to a total of 540 respondents. An Error Component Random Parameter Logit model with correlated errors was estimated to measure the effect of both labels on the utility of consumers. Results indicated that the PDO and the EU organic labels are positively valued: consumers are willing to pay an extra-price of approximately 2€/liter for a bottle of olive oil with the PDO label and approximately 1€/liter more for an olive oil with the EU organic label. In addition, the interaction between the two labels was statistically significant and negative, so the simultaneous provision of both labels does not increase consumers’ willingness to pay.