Using 7 years of household-level scanner data, we use a hedonic pricing model to estimate the organic price premium for four retail-level food products. In each case, we find strong organic premiums of about 30% for bagged carrots, over 40% for canned soup, over 50% for coffee, and over 70% for milk. Using the estimated results from the hedonic price model, we pool the results across products, markets, and years, and then estimate a novel second-stage model where we uncover retail-level market factors associated with higher or lower premiums. For example, we find that category-level organic sales are associated with higher organic price premiums, whereas category-level nonorganic sales are associated with lower premiums. Taken collectively, our results suggest that organic price premiums are not threatened in the near term, but that several competing factors help moderate the size of the premiums.
All Science Journal Classification (ASJC) codes
- Food Science
- Geography, Planning and Development
- Animal Science and Zoology
- Agronomy and Crop Science
- Economics and Econometrics