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The Importance of the Indirect Transfer Mechanism for Consumer Willingness to Pay for Fair Trade Products - Evidence from a Natural Field Experiment

Description of the project:
A natural field experiment is conducted on the determinants of consumer’s willingness to pay for “fair trade” (FT) products. In four treatments, subjects are offered different choices in connection with a coffee purchase, such as buying regular coffee or FT coffee at a premium, regular coffee with or without a premium, or donating directly or not donating. Depending on the treatment, the premium or direct donations are either given to FT organizations or a well-known charity. By comparing the four treatments, we show that a large part of the willingness to pay a premium for FT coffee over regular coffee is not related to the specific attributes of FT coffee nor to the specific cause of the fair trade movement but rather caused by the indirect transfer mechanism that FT uses, i.e., selling products at a premium.

contact person: Prof. Dr. Günther Schulze
Phone: 0761 203-2342
Email: guenther.schulze@vwl.uni-freiburg.de
Runtime:
Start of project: 01.01.2009
End of project: 01.02.2013
Project Management:
Albert-Ludwigs-University Freiburg
Schulze G
Abteilung für Internationale Wirtschaftspolitik
am Institut für Allgemeine Wirtschaftsforschung
Platz der Alten Synagoge
79085 Freiburg i. Br.
Germany

Phone: 0761-203 2342
Fax: 0761-203 2414
Email: judith.mueller@vwl.uni-freiburg.de
http://www.vwl.uni-freiburg.de/iwipol/sopo.htm
Actual Research Report

Contributors:
  • Günther Schulze
  • Hannes Koppel
Keywords:
    fair trade, determinants of altruism, experimental economics
project-related publications:
  • Koppel, Hannes, Schulze, Günther G.: The Importance of the Indirect Transfer Mechanism for Consumer Willingness to Pay for Fair Trade Products - Evidence from a Natural Field Experiment Journal of Consumer Policy, 2013; 36 (4): 369-387. : http://dx.doi.org/10.1007/s10603-013-9234-0