CONSUMER AND MARKET DEMAND AGRICULTURAL POLICY RESEARCH NETWORK

Now the utility function changes to: ui = u0 − pi −λplossi + pgaini +ε i ε → N (0,δ 2 ) Where plossi captures the difference between the reference price and the observed price when the observed price is above the reference point; pgaini captures the difference between the reference price and the observed price when the observed price is below the reference point; pi is the observed price for an in. [...] Taking HBRF as the reference point and HBFF as the observed attribute, HBgaini captures the difference between the reference point and the observed attribute when the observed attribute is more than the reference point, which means HBFF − HBRF >0; HBlossi captures the difference between the reference point and the observed attribute when the observed attribute is less than the reference point, whi. [...] Taking HBRF as the reference point and HBFF as the observed attribute, the item (HBFF−HBRF)*C represents the reference-dependent effects for the health benefit gain; and the item λ*(HBFF−HBRF)*C represents the reference-dependent effects for the health benefit loss. [...] 14 Where uRF, uPL-FF and uFL-FF are the per unit utilities from consuming one unit of the regular food, one unit of the partial labelled functional food and one unit of the full labelled functional food respectively; the corresponding prices and health benefits are PRF, PPL-FF, PFL-FF, HBRF, HBPL-FF and HBFL-FF; Here, the first equation measures the utility if one unit of regular product is consum. [...] Note that there is a reference-dependent effect for the health benefits attribute in the second equation, and there are reference-dependent effects for both the health benefits attribute and the labelling attribute in the third equation.