Do labels capture consumers’ actual willingness to pay for Fair Trade characteristics?

Labeling schemes are used as a mechanism to inform consumers about products with both public and private characteristics. Consumers are increasingly interested in the ethical characteristics of food products and are willing to pay the premium for it. Nevertheless, market shares of ethically produced food products remain low. Not much research has been directed towards the question whether labels completely incorporate the ethical characteristics they stand for and are able to convey these values to consumers. Using two, partially incentive compatible, stated choice experiments in a natural consumer environment and chocolate as study object, we are able to compare consumers’ willingness to pay for a Fair Trade label and for the label’s underlying characteristics. Results show that dispersion exists between the value of a Fair Trade label and the actual values consumers attach to the underlying characteristics of Fair Trade