Price Premium of Organic Food in Sweden

Abstract

Individuals are increasingly demanding pesticide-free and environmentally friendlier options in their grocery shopping. They are, however, well aware that when arriving at the cashier- they are going to have to pay for it. Literally. By applying a unique approach to the hedonic model this paper estimates the organic price premium for a basket of nine different goods using price scanner data collected from Swedish retailers. The estimated organic price premiums range from 16.2% to 53.5%. This paper finds little to no difference in organic price premiums between urban and rural regions.