Are consumers willing to pay more for “circular economy” products?
Are consumers willing to pay more for “circular economy” products?Gaia Pretner, Francesco Testa, Nicole Darnall, Fabio Iraldo
While prior research suggests that consumers are willing to pay higher prices for products with environmentally friendly attributes, this relationship may not apply to “circular economy” products because of perceived quality issues with “circular” products. We examine consumers’ willingness to pay (WTP) for “circular” products in three ways. First, we consider consumers’ WTP for garments that either are made from either recycled fibers or are reused. Second, we assess whether WTP increases when consumers are provided information about the circular product’s reduced environmental impacts. Third, we evaluate whether WTP varies based on the source of environmental information is third party verified. We examine these issues for 2,400 U.S. and Italian consumers in an experimental setting. Our results suggest that WTP for circular products, both recycled and reused, is lower than the conventional version of the same product. However, when consumers are provided with information about the environmental virtues of the product, and especially when that information is verified by a third-party, consumers’ WTP increases significantly. These findings expand the debate about consumers’ WTP for environmentally friendly products and how businesses can better market their “circular economy” products.#Circular Economy #circular products #consumers #environmental information #experiment #third party certification #Willingness to pay