Title	Use of spike models in measuring consumers' willingness to pay for non-GM oil
Authors	Hu W
Year	2006
DOI/WEB/URL	http://purl.umn.edu/43786
Link to Full-text	http://ageconsearch.umn.edu/bitstream/43786/2/Hu%20JAAE%20December%202006.pdf
Keywords	Agbiotech Agricultural biotechnology Asia Beijing China Consumer analysis Crop biotech Developing countries Genetically modified crops GM crops Impacts on Consumers
Journal	Journal of Agricultural and Applied Economics
Volume	38
Issue	3
Start Page	525
End Page	538
Citation	Hu, W. 2006. Use of spike models in measuring consumers' willingness to pay for non-GM oil. Journal of Agricultural and Applied Economics 38 (3): 525-538.
Abstract	The study is based on a survey of consumers' intentions to purchase biotech vegetable oil in Beijing, conducted in 2002-3 with 671 respondents in farmers' markets and supermarkets. Three models are estimated in order to treat the endogeneity of purchase and payment decisions, akin to two-stage, sample selection approach. The first is the conventional binary choice model that does not separate the probability of purchase from the amount the consumer is willing to pay and does not account for zero willingness to pay. The second model includes two equations. The first specifies demographic and attitudinal variables to explain the probability that a consumer chooses to purchase the product, and the second includes a constant and the payment card variable to explain payment amounts. The third model recognizes the correlations between the two steps: whether to pay a positive amount for the biotech oil, and if positive, how much. The same variables are used in the two stages except for product price. The author calls this approach the spike WTP model with covariates. Though he finds the statistical results to be similar between the spike model and the conventional binary choice model, suggesting that there is no bias created by ignoring the participation decision, the spike model is favored by the author because of its treatment of non-participation probabilities.

Use of spike models in measuring consumers' willingness to pay for non-GM oil

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