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1.Introduction
Transforming the agri-food system towards lower-carbon emissions is a critical element to combat climate change, given that it accounts for about one-third of global carbon emissions (Crippa et al., 2021). This urgency is compounded by increasing incomes and changing dietary preferences, particularly the growing demand for meat and dairy products, which further amplify the system's carbon emissions (Rust et al., 2020; Guzmán-Luna et al., 2022).
Carbon labeling is recognized as a cost-effective and feasible market-based environmental management tool in reducing consumer carbon footprints (Taufique et al., 2022). It aims to encourage low-carbon consumption by providing information on products’ carbon emissions (Emberger and Menrad, 2018) and has been adopted in over 13 developed countries and regions (Liu et al., 2016). Literatures have shown mixed results of the carbon label scheme implementation. Some studies demonstrate positive effects, it increased willingness to pay for low-carbon products (Xu and Lin, 2021), enhanced sales of low-carbon items, and reduced high-carbon product sales (Edenbrandt and Lagerkvist, 2021). Others indicate minimal impact on pricing or demand (Kilders and Caputo, 2024) and potential consumer preference for high-emission products in certain cases (Soregaroli et al., 2021). Besides, most of the research has been conducted in developed countries (Muller et al., 2019). A few emerging literatures have shown attention to developing countries, which rely on stated preference analysis (Xu and Lin, 2021; Wang et al., 2023) or based on student samples (Zhao et al., 2023), potentially suffer hypothetical bias and representativeness issues.
On the other hand, there is a growing interest in literatures to evaluate the impact of designed interventions in behavior or preferences changes, such as information treatment or price adjustments (Katare et al., 2023; Meerza et al., 2023; Zossou et al., 2022). A considerable number of studies use different experiment methods to find treatment effects on consumer willingness to pay for food with eco-labels (Zhou et al., 2017; Staples et al., 2020; Zhang et al., 2021), but without careful assessment of experiment designs (Bougherara and Combris, 2009).
The emergence of carbon labeled foods in China provides a opportunity to gather empirical evidence in emerging countries. This paper employs a real online auction experiment in two Chinese cities, Shanghai and Beijing, as a case study to examine consumer preferences for carbon-neutral milk and the impact of information treatment, conducts a comparative analysis of the treatment effects under different experiment designs.
2.Objective
The empirical objectives are to explore: 1) whether there exists a WTP for carbon-neutral claim on food by consumers to alleviate carbon emissions by shopping and what factors may influence such WTPs? 2) whether receiving more information about global warming nudges consumers towards low-carbon consumption and what factors influencing the nudge impact? 3) whether there exists a difference for treatment effect results under different experiment design, if yes, what causes the differences? The contribution of this study to literature has two folds. It is the first to study consumers’ actual willingness to pay for carbon labels in emerging countries, alleviating hypothetical bias and sample selection problems. Secondly, it is among the few studies that evaluate the differences in treatment effects attributable to various experimental designs and investigates the underlying causes.
3.Method
This study has opted for the real BDM auction method (Becker et al., 1964), which is shown to be effective in numerous literatures (Banergi et al., 2020; Liu and Tian, 2021; Jiang et al., 2023). The auction design incorporates an endowment-and-upgrade approach to directly elucidate consumers' willingness to pay for food labels. Participants indicated the premium they were willing to pay to exchange the endowed milk for the upgraded version. Simultaneously, a random market price was generated from the predetermined distribution. The distribution of the random market price is determined by experts' consultations and a pilot investigation of the emerging market. The specific random market price distribution is not known to the respondents to avoid anchor effects and to ensure their bids remained independent of any predetermined price (Lusk et al., 2001). If a participant's bid equaled or exceeded the random market price, they paid the generated price and the endowed milk to obtain the upgraded product. The payment was facilitated through a deduction of platform points, automatically carried out upon the release of auction results. The obtained products were shipped to participants' addresses by the platform, safeguarding anonymity as researchers lacked access to this information.
4.Findings and conclusion
First, consumers demonstrate a WTP an average of 2.3 yuan for products bearing a carbon-neutral label. Second, certain demographic and psychological factors influence this WTP: younger individuals, those employed, individuals in related professions, more altruistic people, and those who believe carbon labels effectively combat climate change or signify a high-quality lifestyle are more inclined to pay a premium. Third, we observed consistent values across different experimental designs, albeit with varying levels of significance. The within-subjects design highlighted that information intervention significantly boosts bids for carbon-neutral labeled milk by an average of 0.18 yuan at a 5% significance level. However, this increase was not statistically significant in the between-group design, while in the mixed design, the rise was significant at the 10% level. Fourth, we found no significant difference in WTP for carbon labels before and after the presentation of unrelated information, indicating that the observed differences are not attributable to order effects. In the within-subjects design, 14 out of 151 respondents preferred consistency in their bids, suggesting a tendency to stick with their initial bid. There was no significant difference between the intervention and control groups in their valuation of carbon labels, which suggests the absence of an inappropriate baseline issue in the between-subjects design. Finally, while the between-design results suggest that information intervention does not significantly enhance the premium for carbon labels, it appears to elevate consumers' intentions for repeat purchases and increases in consumption amounts.
