A study of the impact of the Fairtrade label on consumers’ willingness to pay : an application to the case of chocolate
Promotor(s) : Tharakan, Joseph
Date of defense : 15-Jun-2020/25-Jun-2020 • Permalink :
|A study of the impact of the Fairtrade label on consumers’ willingness to pay : an application to the case of chocolate
|Translated title :
|[fr] Une étude de l'impact du label Fairtrade sur la disposition à payer des consommateurs: une application au cas du chocolat
|Date of defense :
|Committee's member(s) :
|Number of pages :
[en] International trade
[en] Willingness To Pay
[en] Province of Liège
|Business & economic sciences > International economics
Business & economic sciences > Quantitative methods in economics & management
|Target public :
Professionals of domain
|Université de Liège, Liège, Belgique
|Master en sciences économiques, orientation générale, à finalité spécialisée en economic, analysis and policy
|Master thesis of the HEC-Ecole de gestion de l'Université de Liège
[en] Generally speaking, this master thesis discusses the impacts of Fairtrade label at two scales. Firstly, even though the fact this certiﬁcation has a worldwide impact is obvious, this impact has to be deﬁned. Secondly, the consumers’ purchasing behaviour must be analysed as they are the last market players. Going through the current literature review, there is a real lack of research about the Fairtrade cocoa industry. This thesis is bridging the gap through theoretical models and an empirical work.
Before going into details, the Fairtrade label and the cocoa market are screened to have a clear vision of the topic and the related factors. The implications of the certiﬁcation are detailed and quantiﬁed, and the structure of the cocoa market is dissected. In short, the Fairtrade label ﬁxes a price ﬂoor and a community development premium. It oﬀers growers more stable and fair prices as well as better living conditions. Moreover, the environmental dimension is taken into account in the Fairtrade standards. The main point is the cocoa market suﬀers from skewed market power towards the higher link in the value chain, leaving growers with little bargaining power.
Next, a theoretical model is developed, based on Heckscher and Ohlin’s theories. This part ﬁrst presents a three-factor model studying the local impact of the introduction of such a label. Then, it moves to the global level with the model of Vanssay and Yanchus .
Then, the concept of willingness to pay is deﬁned and several approaches to estimate it are assessed. After a detailed comparison, the polychotomous choice approach will be selected to be used in the empirical part of this thesis.
Finally, this master thesis identiﬁes and quantiﬁes some important factors impacting the consumers’ willingness to pay for Fairtrade plain chocolate bars. This analysis is based on data gathered through an online survey. The chosen methodology is the estimation of a Tobit model via a maximum likelihood estimation method. The statistically signiﬁcant results provide us with several important ﬁndings. On this basis, Fairtrade organisations are recommended to take some actions to improve their attractiveness to potential consumers for their certiﬁed products, and particularly for chocolate.
All in all, those results can have a great impact on the ability of Fairtrade organisations to help marginalised cocoa growers through consumers’ knowledge and conﬁdence about Fairtrade standards.
Cite this master thesis
The University of Liège does not guarantee the scientific quality of these students' works or the accuracy of all the information they contain.