The censoring problem arises because while some consumers pay premium and other
consumers do not. In this case, the dependent variable is continuous only to the right of
zero. That is, it can take only non-negative values, with a considerable fraction of the
observations piled-up (i.e., censored) at exactly zero.
Dummy variables for consumption of products in both models were statistically significant.
This shows us, there is a shift in demand for those products from conventional
products to COOL products. Consumers are 58 percentages more willing to pay COOL
products for Ayvalık Olive Oil. For Ezine cheese, consumers are 43 percentages more
willing to buy compared to conventional counterparts.
From Heckman Demand Model, we could also calculate the premium amount for
those products.
For Ayvalık Olive Oil; P for COOL/P For Conventional =exp.((-0.5873/-0.9787))=1.82 which
means that consumers are willing to pay extra for COOL Ayvalık Olive Oil 82 percent
more than conventional product price.
For Ezine Cheese, P for COOL/P For Conventional =exp. ((-0.4347/-0.3429))=3.55 which
means that consumers are willing to pay extra for COOL Ayvalık Olive Oil 3.55 times
conventional product price.