An analysis of the territorial factors affecting milk purchase in Italy

Numerous international studies have pointed out that consumers are usually willing to pay a premium 22 price for domestic and local food. This paper describes the use of a choice experiment to investigate 23 the willingness to pay (WTP) a premium price for milk while considering three attributes: origin (south 24 Italy, north-centre Italy, or other European Union countries), area of production (mountain or plains), and 25 rearing method (cows grazed or kept in a barn). The data collected were analysed by means of three 26 approaches. First, we used a multinomial logit model to estimate the average premium price for the three 27 attributes considered. Second, an interaction term between price and quantity of milk purchased weekly 28 was introduced into the model. This made it possible to verify whether the quantity purchased can mod- 29 ify theWTP, and the magnitude and significance of the effect. Finally, the latent class method was used to 30 explore the heterogeneity of the preferences. The results suggest that the choice experiment, despite pro- 31 viding important qualitative measures, should be utilised with caution regarding premium price esti- 32 mates in the analysis of food demand.