Article | Journal of Economics & Management Strategy | spring 2009

Households' Willingness to Pay for 'Green' Goods: Evidence from Patagonia's Introduction of Organic Cotton Sportswear

by Ramon Casadesus-Masanell, Michael Crooke, Forest L. Reinhardt and Vishal Vasishth

Abstract

To shed light on individuals' willingness to pay for "green" goods (i.e., goods that are supposed to have lower adverse environmental impacts either in production or in use), we study data from the introduction by Patagonia, Inc., of organic cotton sportswear in the mid 1990s. Patagonia, a maker of high-end outdoor wear, substituted organic cotton for conventionally grown cotton in all of its sportswear (i.e., casual clothing for travel and leisure) in 1996. We find that customers were willing to pay significant premiums for organic cotton garments although the organic cotton provided no demonstrable private incremental benefits to the customer.

Keywords: Spending; Consumer Behavior; Environmental Sustainability; Consumer Products Industry;

Citation:

Casadesus-Masanell, Ramon, Michael Crooke, Forest L. Reinhardt, and Vishal Vasishth. "Households' Willingness to Pay for 'Green' Goods: Evidence from Patagonia's Introduction of Organic Cotton Sportswear." Journal of Economics & Management Strategy 18, no. 1 (spring 2009): 203–233.