Consumers’ Willingness to Pay a Premium for Eco-Labeled LED TVs in Korea: A Contingent Valuation Study

Abstract

Abstract:Although the production costs and prices of eco-labeled products are higher than those of conventional ones, the use of greener products can lead to better environmental outcomes. Thus, the consumers' preferences for eco-labeled products should be investigated to understand the potential of markets with green products. This study attempts to examine the consumers' preference or willingness to pay (WTP) a premium for eco-labeled products using a specific case study of a 43-inch LED TV, which is a common home appliance in Korea. For this purpose, a contingent valuation survey of 1000 Korean consumers was conducted in June 2016. We used a one-and-one-half-bounded dichotomous choice question to derive the additional WTP responses and a spike model to analyze zero additional WTP responses. The mean additional WTP a premium for the eco-labeled 43-inch LED TV is estimated to be KRW 29,007 (USD 24.8), which is statistically meaningful at the 1% level. This value amounts to 3.9% of the price of a conventional 43-inch LED TV (KRW 750,000 or USD 640.5) and can be interpreted as the external benefit of an eco-labeled LED TV. We can conclude that Korean consumers are ready to pay a significant premium for eco-labeled LED TVs. Moreover, we examined the consumer's characteristics that affect the probability that the person will be willing to pay a premium for an eco-labeled LED TV and found that it would be effective to set high-income, older, highly-educated, and female consumers with children as marketing targets.

Sustainable Consumer Behaviour: A Collection of Empirical Studies

“…Consumers' Willingness to Pay a Premium for Eco-Labeled LED TVs in Korea: A Contingent Valuation Study [12] assesses WTP for a popular eco-friendly LED TV by using a sophisticated contingent valuation method. The estimated WTP amounts to about 4% of the price of the TV and is higher for high-income, older, highly-educated, and female consumers with children.…”

Factors Forming the Consumers’ Willingness to Pay a Price Premium for Ecological Goods in Ukraine

“…The willingness of households to pay a price premium for products in various parts of the world has been analysed by many scientists [15,16,17,18,19,20]. However, already in 2010, Aichlmayr [21] observed that: “In recent years, green consumption and marketing have triggered close attention and investments from producers”.…”

Consumers’ Willingness to Pay More for Eco Friendly Products (Green Products) Classification Daily Needs Products

“…In his study he measured the preferences and willingness of consumers to pay for coffee labeled certification in Taiwan, with certification results that are easily known, organic, the level of certification of products that are environmentally friendly, and shows that fair trade will make consumers willing to pay more. Ecolabeling tends to be an important factor in influencing consumer purchasing decisions, when the price of green products is relatively expensive or of low quality, in other words the product attributes of ecolabels have a dominant role compared to other product attributes [30] when consumers will decide to buy it at a higher price than conventional products.. Research shows the same results, that consumers are willing to pay more for the price of electrocable products, such as 43-inch LED TVs for consumers in Korea [25] , and seafood [34]. From this description, I propose the following hypothesis : H2 : Ecolabel is thought to influence the Consumers' Willingness to Pay More.…”