Two Essays on Consumer Choice of Canned Tuna Ecolabels and An Essay on Water Disconnection Theory and Nonpayment Contagion Behavior

Banguning Asgha

doi:10.7273/000007316

There are two analyses on consumer choice of canned tuna ecolabels and an analysis on disconnection theory in this dissertation. In the first chapter, I investigate consumer preferences and willingness to pay for canned tuna ecolabels among supermarket shoppers in Jakarta, Indonesia. Despite being one of the largest tuna producers in the world, Indonesia is facing serious environmental and resource sustainability problems including overfishing and harmful fishing practices. The presence of ecolabels can potentially shift consumer preferences from non-ecofriendly products to the ecofriendly ones. I find that participants are willing to pay a price premium for local, Marine Stewardship Council (MSC), fairtrade, and dolphin-safe labels. Dolphin-safe presents the highest average premium price of 17%, whereas the other three labels exhibit 4%. The average price premium for MSC increases up to 11% towards those who are well-educated and always read labels before buying. Building on the findings of price premiums associated with ecolabels from the first chapter, the second chapter answers a question on how the presence of ecolabels affects the changes of canned tuna purchased. Using a hypothetical volumetric choice experiment (VCE), I find that all ecolabeled canned tunas are own-price elastic. The results also suggest that respondents became more sensitive to the changes in price as the number of ecolabels increased. My study examines how multiple ecolabels influence consumer behavior, price sensitivity, and demographic profiles in the Indonesian market of canned tuna. Canned tuna companies and policy makers in Indonesia could use these two studies as a reference in analyzing the feasibility and the potential of launching or adding new ecolabels on canned tuna. The third chapter discusses a different topic on water disconnection theory and nonpayment contagion behavior. In this chapter, I extend a two-stage game theory from a previous study by analyzing the interaction between a water utility and two households. Aligned with the findings from the previous study, I find that higher political and disconnection costs make the water utility less likely to disconnect, while lower moral aversion makes them more likely to ignore the payment. With two households, nonpayment is easier to occur because the moral cost of a nonpaying household decreases by half after knowing that her neighbor does not pay her bill either. I also created a new Agent-Based Model (ABM), simulating the game with many customers to capture nonpayment contagion behavior. The simulations show how disconnection threat and repayment rate affect the changes in the nonpayment rate and customers’ total debt. Finally, a water utility could use this model and adjust the provided parameters to simulate water disconnection depending on its need.

Two Essays on Consumer Choice of Canned Tuna Ecolabels and An Essay on Water Disconnection Theory and Nonpayment Contagion Behavior

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