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Abstract
In this paper we present the results of a contingent valuation study
and an experimental approach to estimating the willingness to pay
for fresh milk produced in the consumer's own region. In contrast to
the fictitious contingent valuation study, responses in the experimental
investigation are connected with real demand decisions and
real financial payoffs in an incentive-compatible way. The experimental
setup allows to quantify the bias in stated willingness to pay
that results from the contingent valuation’s hypothetical character.
In essence, the data suggest that there exists a considerable demand
for milk from the consumers` home region. Yet, significantly
less demand is found in the experimental investigation. At the same
time, subjects accept significantly higher mark-ups for regional
provenance of ecologically produced milk compared to regional
provenance of conventionally produced milk. However, the convex
shape of aggregate demand indicates that there is a substantial
demand for fresh milk of the consumers` home region only when
mark-ups are fairly low.