The value and market effects of eco-labeled products in the Norwegian grocery market - An empirical analysis
Master thesis
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https://hdl.handle.net/11250/2686763Utgivelsesdato
2020Metadata
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- Master of Science [1612]
Sammendrag
The existing research on eco-friendly purchasing relies heavily on stated
preferences, which are commonly measured through consumer surveys based on
hypothetical market settings. In this study, we instead utilize real purchasing data
from a Norwegian grocery chain in order to uncover revealed preferences for ecolabeled
products, more specifically products labeled with the Nordic Swan. We use
multiple regression and a difference-in-differences analysis to quantify the effect
the Nordic Swan has on the price and quantity sold of different consumables.
Comparing this to previous findings of willingness to pay for eco-friendly products
enables us to evaluate whether there exists a hypothetical bias in the market for
these types of goods. We find an average price premium of 21 percent for products
labeled with the Nordic Swan, in addition to an average increase in sales volumes
of 3 percent. However, we find large variations across different product categories.
Overall, our results coincide with findings in the existing literature and hence, this
study does not provide ground to claim that there exists a hypothetical bias in the
market for eco-friendly goods. The study concludes by urging grocery stores to
increase their assortment of eco-labeled goods, not only due to the direct economic
benefits they infer, but also due to the indirect effects eco-labeling has on a store’s
reputation, demand and customer loyalty.
Keywords: Eco-labeling; The Nordic Swan; Price Premium; Hypothetical bias;
CSR; Market equilibrium; Willingness to Pay
Beskrivelse
Masteroppgave(MSc) in Master of Science in Business, Economics - Handelshøyskolen BI, 2020