Differentiated coffees and their potential markets in Puerto Rico: An economic valuation approach





Coffee, willingness to pay, choice experiments, differentiated products


We used Likert-scale questions and the choice experiment method to evaluate the general perception of consumers regarding differentiated products and to estimate their willingness to pay for characteristics of a differentiated coffee, respectively (N=172). The three characteristics perceived as most important are that the product does not use child labor, that more detailed product information is provided in the packaging and that it is produced locally. In addition, we found that consumers are willing to pay between $1,37 and $4,38, in addition to the current price, for an 8-ounce package of coffee with different production characteristics.


Download data is not yet available.

Author Biographies

Héctor Tavárez, Universidad de Puerto Rico

Dpto. de Economía Agrícola y Sociología Rural, Estación Experimental Agrícola

Carmen Álamo, Universidad de Puerto Rico

Dpto. de Economía Agrícola y Sociología Rural, Estación Experimental Agrícola

Mildred Cortés, Universidad de Puerto Rico

Dpto. de Economía Agrícola y Sociología Rural, Estación Experimental Agrícola


Álamo, C. (2012). Implications of product differentiation in food demand: The case of coffee in the United States. Disertación Doctoral. Texas: Texas Tech University.

Andorfer, V.A. & Liebe, U. (2012). "Research on fair trade consumption: A Review". Journal of Business Ethics, 106, 415-435. https://doi.org/10.1007/s10551-011-1008-5

Bateman, I.J., Carson, R.T., Day, B., Hanemann, W.M., Hanley, N., Hett, T., JonesLee, M., Loomes, G., Mourato, S., Ozdemiroglu, E., Pearce, D.W., Sugden, R. & Swanson, S. (2002). Economic valuation with stated preference techniques: A manual. Massachusetts: Edward Elgar. https://doi.org/10.4337/9781781009727

Boys, K.A., Willis, D.B. & Carpio, C.E. (2014). "Consumer willingness to pay for organic and locally grown produce on Dominica: Insights into the potential for an "Organic Island"". Environment, Development and Sustainability, 16(3), 595-617. https://doi.org/10.1007/s10668-013-9496-3

Carlsson, F., Frykblom, P. & Lagerkvist, C.J. 2005. "Using cheap talk as a test of validity in choice experiments". Economics Letters, 89(2), 147-152. https://doi.org/10.1016/j.econlet.2005.03.010

Costa-Font, M., Gil, J.M. & Traill, W.B. (2008). "Consumer acceptance, valuation of and attitudes towards genetically modified food: Review and implications for food policy". Food Policy, 33(2), 99-111. https://doi.org/10.1016/j.foodpol.2007.07.002

Cummings, R.G. & Taylor, L.O. (1999). "Unbiased value estimates for environmental goods: A cheap talk design for the contingent valuation method". The American Economic Review, 89(3), 649-665. https://doi.org/10.1257/aer.89.3.649

Darby, K., Batte, M.T., Ernst, S. & Roe, B. (2008). "Decomposing local: A conjoint analysis of locally produced foods". American Journal of Agricultural Economics, 90(2), 476-486. https://doi.org/10.1111/j.1467-8276.2007.01111.x

DeShazo, J.R. & Fermo, G. (2002). "Designing choice sets for stated preference methods: The effects of complexity on choice consistency". Journal of Environmental Economics and Management, 44(1), 123-143. https://doi.org/10.1006/jeem.2001.1199

Dickinson, D.L. & Bailey, D. (2002). "Meat traceability: Are US consumers willing to pay for it?" Journal of Agricultural and Resource Economics, 27(2), 348-364.

Didier, T. & Lucie, S. (2008). "Measuring consumer's willingness to pay for organic and fair trade products". International Journal of Consumer Studies, 32(5), 479- 490. https://doi.org/10.1111/j.1470-6431.2008.00714.x

FEMA. (2018). 2017 hurricane season FEMA after-action report. U.S. Department of Homeland Security.

Gil, J.M., Gracia, A. & Sánchez, M. (2000). "Market segmentation and willingness to pay for organic products in Spain". International Food and Agribusiness Management Review, 3(2), 207-223. https://doi.org/10.1016/S1096-7508(01)00040-4

Hausman, J., & McFadden, D. (1984). "Specification tests for the multinomial logit model". Econometrica, 52(5), 1219-1240. https://doi.org/10.2307/1910997

Holmes, T.P., Adamowicz, WL. & Carlsson, F. (2017). "Choice experiments". En Champ. P.A., Boyle, K.J. & Brwon, T.C. (Eds.). A primer on nonmarket valuation (pp. 133-186). Springer Netherlands. https://doi.org/10.1007/978-94-007-7104-8_5

Hoyos, D. (2010). "The state of the art of environmental valuation with discrete choice experiments". Ecological Economics, 69(8), 1595-1603.


James, J.S., Rickard, B.J. & Rossman, W.J. (2009). "Product differentiation and market segmentation in applesauce: Using a choice experiment to assess the value of organic, local, and nutrition attributes". Agricultural and Resource Economics Review, 38(3), 357-370.


Janssen, M. & Hamm, U. (2012). "Product labelling in the market for organic food: Consumer preferences and willingness-to-pay for different organic certification logos". Food Quality and Preference, 25(1), 9-22. https://doi.org/10.1016/j.foodqual.2011.12.004

Jensen, K.L., Jakus, P.M., English, B.C. & Menard, J. (2004). "Consumers' willingness to pay for eco-certified wood products". Journal of Agricultural and Applied Economics, 36(3), 617-626. https://doi.org/10.1017/S1074070800026900

Johnston, R.J., Boyle, K.J., Adamowicz, W., Bennett, J., Brouwer, R., Cameron, T.A., Hamenann, W.M., Hanley, N., Ryan, M., Scarpa, R., Tourangeau, R. & Vossler, Ch.A. (2017). "Contemporary guidance for stated preference studies". Journal of the Association of Environmental and Resource Economists, 4(2), 319-405. https://doi.org/10.1086/691697

Katz, M., Campbell, B. & Liu, Y. (2019). "Local and organic preference: Logo versus text". Journal of Agricultural and Applied Economics, 51(2), 328-347. https://doi.org/10.1017/aae.2019.4

Krinsky, I. & Robb, A.L. (1986). "On approximating the statistical properties of elasticities". The Review of Economics and Statistics, 68(4), 715-719.


Krinsky, I. & Robb, A.L. (1990). "On approximating the statistical properties of elasticities: A correction". The Review of Economics and Statistics, 72(1), 189- 190. https://doi.org/10.2307/2109761

Lancaster, K. (1966). "A new approach to consumer theory". Journal of Political Economy, 74(2), 132-157. https://doi.org/10.1086/259131

Laroche, M., Bergeron, J. & Barbaro-Forleo, G. (2001). "Targeting consumers who are willing to pay more for environmentally friendly products". Journal of Consumer Marketing, 18(6), 503-520. https://doi.org/10.1108/EUM0000000006155

Loureiro, M.L. & Hine, S. (2002). "Discovering niche markets: A comparison of consumers' willingness to pay for local (Colorado Grown), organic, and GMO- free products". Journal of Agricultural and Applied Economics, 34(3), 477-487. https://doi.org/10.1017/S1074070800009251

Loureiro, M.L. & Lotade, J. (2005). "Do fair trade and eco-labels in coffee wake up the consumer conscience?" Ecological Economics, 53(1), 129-138.


Loureiro, M.L. & Umberger, W.J. (2007). " A choice experiment model for beef: What US consumer responses tell us about relative preferences for food safety, country-of-origin labeling and traceability". Food Policy, 32(4), 496-514. https://doi.org/10.1016/j.foodpol.2006.11.006

Loureiro, M.L., McCluskey, J.J. & Mittelhammer, R.C. (2002). "Will consumers pay a premium for ecoâ€labeled apples?" Journal of Consumer Affairs, 36, 203-219. https://doi.org/10.1111/j.1745-6606.2002.tb00430.x

Louviere, J., Hensher, D. & Swait, J. (2000). Stated choice methods. Analysis and application. Cambridge: Cambridge University Press. https://doi.org/10.1017/CBO9780511753831

Lusk, J.L., Roosen, J. & Fox, J.A. (2003). "Demand for beef from cattle administered growth hormones or fed genetically modified corn: A comparison of consumers in France, Germany, the United Kingdom, and the United States". American Journal of Agricultural Economics, 85(1), 16-29. https://doi.org/10.1111/1467-8276.00100

McCluskey, J.J. & Loureiro, M.L. (2003). " Consumer preferences and willingness to pay for food labeling: A discussion of empirical studies". Journal of Food Distribution Research, 34(3), 95-102. https://dx.doi.org/10.22004/ag.econ.27051.

McFadden, D. (1974). "Conditional logit analysis of qualitative choice behavior". En Zarembka, P. (Ed.). Frontiers in Econometrics (pp. 105-142). New York: Academic Press.

Narine, L.K. (2013). Consumers' willingness to pay and the market potential for tomatoes produced under differentiated production systems. Tesis de Master. University of the West Indies.

Revelt, D. & Train, K. (2000). Customer-specific taste parameters and mixed logit: Households' choice of electricity supplier. Working Paper. Berkeley: University of California.

Rodríguez-Entrena, M., Salazar-Ordóñez, M. & Sayadi, S. (2013). "Applying partial least squares to model genetically modified food purchase intentions in southern Spain consumers". Food Policy, 40, 44-53. https://doi.org/10.1016/j.foodpol.2013.02.001

Salazar-Ordóñez, M., Cordón-Pedregosa, R. & Rodríguez-Entrena, M. (2018). "A consumer behaviour approach to analyse handmade and locally made agrifood products in Western Honduras". Economía Agraria y Recursos Naturales, 18(2), 05-27. https://doi.org/10.7201/earn.2018.02.01

Train, K.E. (2009). Discrete choice methods with simulation. Cambridge: Cambridge University Press.

U.S. Census Bureau (2018). QuickFacts. United States Census Bureau. Obtenido de: https://www.census.gov/quickfacts/PR.

Verbeke, W. & Ward, R.W. (2003). "Importance of EU label requirements: An application of ordered probit models to Belgium beef labels". Comunicación presentada al American Agricultural Economics Association Annual Meetings. Montreal, Canada.

Wann, J., Kao, C. & Yang, Y. (2018). "Consumer preferences of locally grown specialty crop: The case of Taiwan coffee". Sustainability, 10(7), 2396. https://doi.org/10.3390/su10072396

Zhang, C., Bai, J. & Wahl, T.I. (2012). "Consumers' willingness to pay for traceable pork, milk, and cooking oil in Nanjing, China". Food Control, 27(1), 21-28. https://doi.org/10.1016/j.foodcont.2012.03.001