Consumer Demand for Fair Trade: New Evidence from a Field Experiment Using eBay Auctions of Fresh Roasted Coffee

Abstract

A majority of surveyed consumers say they prefer ethically certified products, such as Fair Trade coffee, over non-certified alternatives, and are willing to pay a price premium for such products. There is no clear evidence, however, that people seek out such products and pay a premium for them when shopping. We provide new evidence on consumer behavior from an experiment conducted on eBay. We find that the Fair Trade label has a substantial positive effect on bidding for coffee. On average, shoppers paid a 23% premium for coffee labeled Fair Trade. This premium was not affected by the recent recession.