ABSTRACT
The revealed-preference estimates begin with estimates of the premium organic-food buyers pay. These are estimated using prices of organic and conventional foods recorded at several local stores. Prices were observed for organically and conventionally grown produce at five stores in West Los Angeles and Santa Monica. The assumption that the supply curves move in parallel is reasonable over the late spring/early summer period cover by these data, since most of the fresh produce sold then is grown domestically, and seasonal effects are similar for both organic and conventional produce. In contrast, the supply curves are less likely to move in parallel during the winter when a substantial share of conventional produce is imported but nearly all organic produce sold is grown in-state. Each store can offer organic or conventional produce along a corresponding supply curve. These supply curves are largely determined by the wholesale prices the store can obtain, plus a standard markup.
