New Wine from Old Grapes: Innovation in the Eco-Friendly B2C Space

Abstract

Despite the upsurge in the need to develop eco-friendly products, few research studies have empirically examined consumers’ preferences for eco-friendly products. We use a choice-based, conjoint analysis method to estimate willingness to pay for alternative transportation fuels in the United States. Unleaded gasoline and ethanol (derived from corn or cellulosic biomass) are the alternative fuels considered in this study. We use a latent class model and introduce sociodemographic variables, such as age of consumers and state of residency, to identify consumer preference heterogeneity. The findings of this study hold important implications for both firms and policy makers. Furthermore, less-polluting fuels is a global problem; conjoint studies are easy to project cross-culturally, as the design and findings can be reexamined and replicated in many locales worldwide.