Research On Price Formation Mechanism Of Certified Safety Rice Based On Hedonic Model

In the case of rice, this paper proceeds an empirical study from the consumerperspective about price formation mechanism of certified safety agricultural products,using Hedonic model with data collected from473questionnaires. By splitting thebundles of features, our study analyze how consumer preferences and utility wereinfluenced by physical attributes, eating attributes, product attributes, safety attributesand credence attributes. then we quantify the premiums of attributes to investigate theprice formation mechanism of certified safety agricultural products.The results of the econometric estimation indicated that most consumers statedthat they rate good to physical attributes and eating attributes, especially impuritiesand color, elasticity, aroma and taste, consequently these attributes get high implicitmarket prices, and improvements may increase the whole price of certified safetyagricultural products. The implicit prices of storage life, brand and QS are less thanimpurities, color and taste shows that most consumers deem delicious chiefly. At thesame time, in the purchasing decisions, people are no longer blindly quest for taste,and pay more attention to safety attributes and credence attributes, such as fertilizersand pesticides, brand, certification mark, QS, therefore, agricultural products withbetter quality can not only meet consumers’ demands, but also make considerableprofit for companies and peasant. What’s more, since product attributes such as gradeand nutrition make little influence on utility, enhancement won’t get desired results.In addition, the problem of information asymmetry bothers the agricultural markets,particularly fertilizers and pesticides, consequently, it has a great impact on utilityand its premium is much more than other attributes. As a result, reduction infertilizers and pesticides can boost price. Finally, in view of the fact that the cognitionlevel of people about certified safety agricultural products varied significantly, it isnecessary to improve people’ cognition level and trust and detect their consumerconfidence, which is of great importance for increasing premiums of certified safetyagricultural products.