Consumers' Valuation of Rice-Grade Labeling

Abstract

The current Korean rice-grading system has a no test option that allows rice to not be graded in the market. This study examines Korean consumers' valuation of a rice-grading system without the no test option. We apply a nonhypothetical experimental auction to elicit consumers' willingness to pay for each rice grade and identify the impact of the provision of additional grading information on product valuation. We then use contingent and inferred valuations to obtain consumers' valuation of a mandatory rice-grading system without the no test option. We find that Korean consumers are willing to pay an additional premium for each rice grade and that rice-grading information is the most important factor that differentiates the rice products. Rice consumers in Korea also strongly prefer a mandatory rice-grading system without the no test option.