Abstract

This study of value-based labelling for apparel products examined consumer willingness to pay (WTP) for three credence attributes of fibre: origin, type and production method. Experimental auctions were conducted with student subjects in Texas and used socks made from cotton and polylactic acid (PLA), a fibre manufactured from corn. The bid results of two rounds were compared. The first round was conducted without information about the credence attributes of the socks. The second round included varying levels of three types of attributes: fibre origin (imported, US and Texas), fibre type (cotton and corn) and production method [conventional, organic and non-genetically modified (GM)]. Tobit regression analysis was performed using the attributes and subject demographics to determine consumer WTP for the various attribute levels and to profile consumers with interest in the attributes. In terms of origin, results show that participants were willing to pay a premium for socks with fibres produced in Texas, but not for those produced in the US. Fibre type mattered, with participants requiring a discount once they learned that socks were made with PLA fibre. The greatest premium ($1.86) was placed on socks labelled as organic, slightly more than the premium for socks labelled as non-GM. The results also indicate that women were less willing to pay for US fibres than men, and Hispanics were less willing to pay for organic or non-GM fibre production. A key finding of this study is that consumers value information about the local origin of fibres. The premium for organic fibres is not unexpected, given the success of the organic apparel market, but the premium on non-GM fibres suggests that sustainable production systems that are not organic may be successful if they emphasize other attributes such as local or non-GM.