Information or Prices, Which Is Most Powerful in Increasing Consumer Demand for Organic Vegetables?

Sinne Smed, Laura M. Andersen


Based on a unique and very detailed panel dataset covering consumption of organically and conventionally produced vegetables in the years 2005 - 2007, we examine the effects of information about positive health effects of consuming organic vegetables and information about negative health effects of consuming conventional vegetables on demand for organic foods for six different segments of Danish households. Three of these segments are positive towards organics whereas the remaining three segments are negative or indifferent. Using the double hurdle model we estimate partial effects of both directly and indirectly obtained information as well as prices. The results show, that there are larger effects of information for households where the information is in accordance with initial knowledge and attitudes, hence the positive segments react more to information whereas the negative segments react more to prices. “New” consumers can be persuaded to buy organic vegetables by providing information about the negative health effects of consuming conventional vegetables since it increases the probability of an organic purchase. Once consumers have entered the organic marked for vegetables, information that link health and the consumption of organic vegetables will increase consumption. The results are important for firms and producers who want to successfully target information to different consumer groups with the aim of increasing the market share for organic food.

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International Business Research  ISSN 1913-9004 (Print), ISSN 1913-9012 (Online)

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