Estimating the Consumer Welfare of Grading Information : The Case of Rice
2018
Lee, J.Y., University of Arkansas, Arkansas, USA | Han, D.B., Korea University, Seoul, Republic of Korea | Lee, H.S., Kangwon National University, Chuncheon, Republic of Korea
This study examines consumers' value of rice-grade labeling information to identify the effectiveness of the new mandatory rice grading policy in October 2018. We capture consumers' premiums for "super", "good , and "normal" grades before and after providing grade labeling information using a non-hypothetical random nth price auction. We then estimate consumers' value of grade labeling information by comparing with market premiums. The results suggest that consumer value the provision of grade labeling information, with the highest value for the "super" grade. Given the grade labeling information, the additional detailed information about grade labeling does not affect consumers' rice purchasing behaviors. The findings suggest that the rice-grading information is the important factor differentiating domestic rice, and it also provides consumers credible information on rice quality to make better informed purchasing decisions.
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