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Households' Willingness to Pay for "Green" Goods: Evidence from Patagonia's Introduction of Organic Cotton Sportswear
Authors:Ramon  Casadesus-Masanell Michael  Crooke Forest  Reinhardt Vishal  Vasishth
Affiliation:Harvard Business School Morgan Hall 233 Boston, MA 02163;
Former Chief Executive Officer, Patagonia, Inc. CEO of Revolution Living;
Harvard Business School Morgan Hall 275 Boston, MA 02163;
Former Chief Strategy Officer, Patagonia, Inc.
Abstract:To shed light on individuals' willingness to pay for "green" goods (i.e., goods that are supposed to have lower adverse environmental impacts either in production or in use), we study data from the introduction by Patagonia, Inc., of organic cotton sportswear in the mid-1990s. Patagonia, a maker of high-end outdoor wear, substituted organic cotton for conventionally grown cotton in all of its sportswear (i.e., casual clothing for travel and leisure) in 1996. We find that customers were willing to pay significant premiums for organic cotton garments although the organic cotton provided no demonstrable private incremental benefits to the customer.
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