Estimating the Optimal Premium Rates for Credential Food Attributes: A Case Study in the Northeast United States
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Using data from the 2010 Taste of Place survey conducted in Vermont and three metropolitan
areas in the northeast United States, this study examines consumer willingness to pay (WTP),
estimates price elasticity, and calculates the optimal premium rates for selected credence food
attributes. The empirical results indicate that respondents’ WTP varies significantly across
attributes and is closely associated with certain demographic factors. The estimated optimal
premium rates and estimation procedures presented in this paper can help producers and retailers
identify the optimal premium rates for each attribute in association with geographical or
socioeconomic segments of consumers.