Consumers’ Willingness to Pay for Recycled Versus New/Conventional Products

Abstract

This paper considers the relative preference of consumers for products that have a lower environmental impact due to the reuse of some or all of the material content of the product, as sensitivity toward environmental issues contributed to shifts in consumer behavior that support the growth and diffusion of green marketing and ecologically-conscious consumer behavior: consumer preferences for green firms, wider range in demand for green products, acceptance and demand for recycled products (Vandermerwe & Oliff, 1990). Industry concerns also highlight how recycling presents not only opportunities for job creation but also for a better social behavior (Ewadinger & Mouw, 2005; Farrell Tucker, 2006; Weeks, 2006). Most research on recycling views the key issue as one of behavioral change, i.e. consumers developing a positive attitude towards recycled products and expressing that they are socially responsible through the purchase of green products. The literature to date is of great interest but offers little insight into consumers’ Willingness-To-Pay (WTP) for recycled products, or whether the recycled aspect incorporated into some products has an impact on their Willingness-To-Pay (WTP). The objective of this research is to examine consumers’ Willingness-To-Pay (WTP) for recycled products versus new/conventional products -made entirely of new or virgin materials. More specifically, this research addresses the issue of the impact of the product category on consumers’ willingness to pay premium prices for recycled products versus new/conventional products, and the switching behavior of consumers from recycled to new/conventional products due to relative price differences. Recycled materials often cost more than their virgin produced counterparts (Moore, 1992). But most respondents claimed they would be willing to pay 5% more for environmentally-friendly products (Dagnoli, 1990). This Willingness-To-Pay (WTP) more for environmentaily-friendly products might then just be based on a range of prices that customers feel fair for a product, or might be related to consumer perceptions of price and quality for environmentally friendly products. In some cases recycled products may be perceived to be of lower quality than products made from virgin raw materials (Reid, 1990), and consumers’ quality evaluation of recycled products has been showed to be moderated by the product category (see Mobley et al., 1995). Furthermore, industries are offering an increasingly wide range of recycled products including cartridges, decorative surfaces, tires, carpets, computers, cell phones, printers, greeting cards or facial tissues. As outlined by Mobley et al. (1995), consumers might evaluate the quality of recycled products depending on the type of use, but consumer evaluation of product might also be linked to the perceived risk associated with the product. Personal-use of a product (cell phones) versus non-personal-use products (a photocopier) involves different types and levels of risk.