Willingness to pay for quality of a local extra virgin olive oil

Extra virgin olive oil is one of the most important product of the Italian agri-food sector. Starting from this point of view, the present analysis enhances Italy’s effort to create quality food products with higher added value and valorise the local extra virgin olive oil for the domestic and global market. This paper aims to estimate consumers’ willingness to pay (wtp) for extra virgin olive oil available in the Italian local market (Marche region) with a view to providing some useful insights to outline strategies for promotion of olive oil production. The notion of willingness to pay could be defined as the amount of money represented by the difference between consumers’ surplus before and after adding or improving a given food product attribute. The consumer might be willing to pay more for higher quality, thus compensating for the higher production costs, if the differences in the quality were efficiently communicated to the consumers. The method used in this study is the contingent valuation method that requires a survey in which the consumers are asked how much they would be willing to pay for a higher quality product. The data derives from a survey conducted in Marche region’s supermarkets. The questionnaire contained 4 sections: consumption habits and quality perceptions (section 1), consumers’ opinion (section 2), elicitation willingness to pay (section 3) and socio-economic characteristics (section 4). The elicitation format adapted is a dichotomic choice - double bounded. The empirical results reveal that the consumers are willing to pay a premium for the local extra virgin olive oil certified by the public administration (qm-Quality Marche). The consumers consider the local product as an additional assurance concerning food safety and quality. The paper is divided into six sections. After the introductory section, in the section 1 we discuss the conceptual framework of contingent evaluation. Section 2 and 3 present the methodology in terms of survey design and the model’s specifi- cation. The results of the study are shown and discussed in Section 4. The last section provides the summary and conclusion of the study

Keywords: Extra virgin Olive Oil, Quality, Contingent Valuation; Willingness to pay

Jel codes: Q13, Q18, Q26

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