Behavior-Based Pricing of Organic and Conventional Agricultural Products Based on Green Subsidies
Round 1
Reviewer 1 Report
The effects of economic support and subsidies to agriculture have recently attracted considerable scientific and political interest. Agricultural subsidies can take many forms, but a common feature is an economic transfer, often in direct cash form, from governments to producers. These transfers may aim to reduce the costs of production in the form of making up the difference between the actual market price for farm output and a higher guaranteed price which may potentially bring benefits to organic production. This is an interesting paper which examines the economic and policy aspects of the subsidy debate. It reports some interesting findings. However, further efforts should be made to have a significant contribution in the field before being accepted for publication.
There are many grammar mistakes throughout the paper. Also, the logic flow and expression in some paragraphs need to be revised for further clarity before the paper is accepted.
The abstract is not writing properly. The abstract should summary the background, methods, and results. At the end of Abstract, the important research results or the potential implications should be introduced.
Please provide clear definition of green agricultural products in your paper, do you mean organic products?
The introduction part is rather weak. The authors intended to explain the dilemma of consumers’ attitude toward organic products, but the arguments need to be better structured. Also, the link between environmental subsidies and organic production has not been clearly introduced. The motivation of this research is not clear. The introduction session should include proper research objectives, what problems you this paper will address and what methodology you will use.
Meanwhile, the manuscript includes several sentences that would need references to support the arguments. For example, line 44-45 “However, the development of the green agricultural products market is unsatisfactory, and consumers who prefer green agricultural products do not always buy them”. Similar problem is spreading the whole manuscript. Please check through the whole paper and reference properly.
Line 52, high princes should be high price.
The section of literature should be improved. The literature section and the discussion of the previous studies is far from the general level of sustainability articles. There is a short list of previous work without much effort to organize them in a clearer way. From my understanding the authors tried to focus on two parts of literature, consumers’ preference towards organic food and companies’ pricing strategy under technology innovation. However, previous work is mostly described without critically positioning the current work among reviewed papers and it is unclear how the listed literature informed the current research. Although, the authors tried to differentiate this paper from other price decision paper by taking two extra factors into consideration 1) organic products and 2) environmental subsides. The value of bringing these two factors into the research hasn’t been clarified and how they engaged with existing literature. Will these two factors bring any new insights, constructs or complexities or theoretical contribution? And also, the current literature review is not related to these two factors. This session can be better structured with references updated so as to strengthen the novelty and the relevance of your paper goals.
The section of conclusions is thin. It does not contain any discussion with the previous studies. One main part of the articles in general is the discussion where the results of the paper are discussed and compared to previous studies. This is totally missing from this paper. The authors should develop a section of discussion and really compare, discuss and analyse the findings of this paper in the light of previous studies. This would also show the key message of the paper and tell the key contribution of the paper. Rather than only listing the practical implication, the findings against extant literature/theory will help readers understand the novelty and the contribution of the paper.
Overall, many parts of the text are difficult to read and follow. The paper needs proof-reading and significant improvement.
Author Response
Dear Editors and Reviewers:
Thank you for your letter and for the reviewers’ comments concerning our manuscript entitled “Impact of Green Subsidies on Differential Pricing of Agricultural Products” (Manuscript ID: sustainability-422333). Those comments are all valuable and very helpful for revising and improving our paper, as well as the important guiding significance to our researches. We have studied comments carefully and have made correction which we hope meet with approval. Revised portion are marked in red in the paper.
The main corrections in the paper and the responds to the reviewer’s comments are as following:
Responds to the reviewer’s comments:
Reviewer #1:
1. Response to comment: further efforts should be made to have a significant contribution in the field before being accepted for publication.
Response: We have added “Corollary 2” about the impact of subsidy to the competition between organic and conventional agricultural products. We explicitly added the contribution of this article in the abstract and conclusion.
2. Response to comment: There are many grammar mistakes throughout the paper. Also, the logic flow and expression in some paragraphs need to be revised for further clarity before the paper is accepted.
Response: We have further checked and revised the grammar. Please see the revised version for details.
3. Response to comment: The abstract is not writing properly. The abstract should summary the background, methods, and results. At the end of Abstract, the important research results or the potential implications should be introduced.
Response: We have made a comprehensive revision of the abstract. Especially, the main conclusions of this paper are put forward.
4.Response to comment: Please provide clear definition of green agricultural products in your paper, do you mean organic products?
Response: We have made it clear that the research objects mentioned in this paper is organic products.
5. Response to comment: The introduction part is rather weak. The authors intended to explain the dilemma of consumers’ attitude toward organic products, but the arguments need to be better structured. Also, the link between environmental subsidies and organic production has not been clearly introduced. The motivation of this research is not clear.
Response: We have made a comprehensive revision of the introduction part. Because organic agricultural products are required to limit the use of artificial fertilizers and pesticides in the production process, Government subsidies to organic production in order to promote sustainable agricultural development.
6. Response to comment: Meanwhile, the manuscript includes several sentences that would need references to support the arguments. For example, line 44-45 “However, the development of the green agricultural products market is unsatisfactory, and consumers who prefer green agricultural products do not always buy them”. Similar problem is spreading the whole manuscript. Please check through the whole paper and reference properly. Line 52, high princes should be high price.
Response: We have checked through the whole paper and add references to support the arguments. For example, the sentence “Facts show that eve deeply loyal green consumers will switch between green products and general products.” is instead by ”Research on Nandi et al. [32] shows that eve deeply loyal organic consumers will switch between organic products and conventional products.” And some mistakes appear in lines 44-45, 52 have been deleted.
7. Response to comment: The section of literature should be improved.
Response: We have made a comprehensive revision of the section of literature review. First, we elaborated the development of the studies about behavior-based pricing of enterprise; second, we elaborated the factors affecting consumers' preference for organic agricultural products; the third, we elaborated the impacts of subsidy to enterprise decisions.
8. Response to comment: The section of conclusions is thin. It does not contain any discussion with the previous studies.
Response: We have made a comprehensive revision of the conclusion part. We put forward that the mainly difference compared to previous studies is the model of our study. Our study considered the competition between organic and conventional agricultural products in the market for the first time. Please see the revised version for details.
Reviewer 2 Report
The authors construct two two-stage models of price differentiation in a duopoly market and solve them for the optimal loyal price and poaching price of the two types of enterprises (producing green agricultural products with green agricultural subsidies, and those producing general agricultural products).
The operation of the models has been verified by numerical simulation (for assumptions adopted in the publication).
The study did not carry out any research on real objects (it would be difficult due to the assumptions made when creating the model).
Thus, one can not talk about the analysis of the impact of green agricultural subsidies on prices.
One can only talk about the analysis of the behavior of models describing the impact of green subsidies on product prices.
Specific comments in pdf file.
Comments for author File: 
Comments.pdf
Author Response
Dear Editors and Reviewers:
Thank you for your letter and for the reviewers’ comments concerning our manuscript entitled “Impact of Green Subsidies on Differential Pricing of Agricultural Products” (Manuscript ID: sustainability-422333). Those comments are all valuable and very helpful for revising and improving our paper, as well as the important guiding significance to our researches. We have studied comments carefully and have made correction which we hope meet with approval. Revised portion are marked in red in the paper.
The main corrections in the paper and the responds to the reviewer’s comments are as following:
Responds to the reviewer’s comments:
Reviewer #2:
1. Response to comment: The study did not carry out any research on real objects (it would be difficult due to the assumptions made when creating the model).Thus, one can not talk about the analysis of the impact of green agricultural subsidies on prices. One can only talk about the analysis of the behavior of models describing the impact of green subsidies on product prices.
Response: We changed the title of the study to “Behavior-based pricing of Organic and Conventional Agricultural Products Based on Green Subsidies”. The study is mainly about the analysis of that green subsidy will have a positive or negative impact on the relationship between loyalty and poaching price of organic and conventional agricultural products enterprises, green subsidy will increase the competition between the two enterprises for what kinds of customers.
2. Response to comment: If possible, the authors should improve the readability of Figures 3,4,5,6,7, 8 (size of the font, size of the graph).
Response: We changed the size of the graph to improve the readability of Figures 3,4,5,6,7, 8.
3. Response to comment: typing errors Verse 52. There is “princes” should be “prices”
Response: We have changed the expression of this sentence.
4. Response to comment: bad citation
Response: We have checked through the literature review and corrected the bad citation.
Reviewer 3 Report
The topic would potentially interesting, however the paper is not really well written. The paper is poorly motivated the authors should clarify what is the value added of the paper to our knowledge. My major concerns are related to assumptions of the model. The paper investigates the impacts of green subsidies on differential pricing of agricultural products using two-stages duopoly model.
However it is hardly believe that there are exists any agricultural products which are working in a duopoly framework. Thus the proposed model is far from any real situations. If you like to investigate the price discrimination behaviour of agricultural producers monopolistic competion model would be a natural starting point especially for the market of organic products.
There is a huge literature on that organic farms are considerably different from traditional farmers in terms of motivations of farmers and characteristics of farms. The organic products are usually certified by legal procedures. To get such certifications requires additional investments, efforts and time. On consumer sides, buyers of organic products are differing from traditional consumers, they are coming from middle-class people. Therefore the chance that organic farms and organic consumers are switching to traditional farms and consumers is very limitied. Notice that the demand of organic food are typically price inelastic.
THe model has some other implicit assumption on the farmers behaviour, e.g. farmers are risk averse and producing only one products influencing the price setting behaviour. Again, there is a wealth of literature that farmes are risk averse especially in developing countries. Similarly, farms are typically multiproducts firm which also affect their profit maximiser behaviour.
The paper employs some sensitivity analysis on the impacts of size of green subsidies. However, the impact of green subsidies may be sensitive for types of subsidies, e.g. ad valorem, specific, decoupled payments. It is also important issue wheher green subsidy relates to specific requirement including production technologies. I think these issues also should be mention or elaborate more details.
In short, the paper presents an interesting model, but this model is very far from the intended context. I strongly suggest to reconsiders your story what you like to present with your model.
Author Response
Dear Editors and Reviewers:
Thank you for your letter and for the reviewers’ comments concerning our manuscript entitled “Impact of Green Subsidies on Differential Pricing of Agricultural Products” (Manuscript ID: sustainability-422333). Those comments are all valuable and very helpful for revising and improving our paper, as well as the important guiding significance to our researches. We have studied comments carefully and have made correction which we hope meet with approval. Revised portion are marked in red in the paper.
The main corrections in the paper and the responds to the reviewer’s comments are as following:
Responds to the reviewer’s comments:
Reviewer #3:
1. Response to comment: The paper is poorly motivated the authors should clarify what is the value added of the paper to our knowledge.
Response: The study is mainly about the analysis of that green subsidy will have a positive or negative impact on the relationship between loyalty and poaching price of organic and conventional agricultural products enterprises, green subsidy will increase the competition between the two enterprises for what kinds of customers. We have added the details in introduction and conclusion part.
2. Response to comment: However it is hardly believe that there are exists any agricultural products which are working in a duopoly framework. Thus the proposed model is far from any real situations. If you like to investigate the price discrimination behaviour of agricultural producers monopolistic completion model would be a natural starting point especially for the market of organic products.
Response: In China, organic and conventional agricultural products are mixed and displayed on Tmall, JD and other large e-commerce platforms, as well as in physical supermarkets. The example in introduction part is from Tmall mall in October 2018. Therefore, we think the duopoly model can reflect real situations.
3. Response to comment: On consumer sides, buyers of organic products are differing from traditional consumers, they are coming from middle-class people. Therefore the chance that organic farms and organic consumers are switching to traditional farms and consumers is very limitied. Notice that the demand of organic food are typically price inelastic.
Response: Many studies show that price is an important factor influence the consumer demand for organic fruit(Chironi et al., 2017; Nandi et al., 2016). We find these in the second paragraph of literature review part. Therefore, we think consumers will choose by price between organic and conventional agricultural products.
4. Response to comment: The paper employs some sensitivity analysis on the impacts of size of green subsidies. However, the impact of green subsidies may be sensitive for types of subsidies, e.g. ad valorem, specific, decoupled payments. It is also important issue whether green subsidy relates to specific requirement including production technologies. I think these issues also should be mention or elaborate more details.
Response: Because the most widely used type of agricultural subsidy is the direct form of financial subsidy, and this is more convenient for calculation and analysis. Therefore, we adopt the form of considering the fixed subsidy for unit organic products to conduct modeling and analysis. We have added the analysis of types of green subsidies in introduction parts also.
Round 2
Reviewer 1 Report
The authors have satisfactorily addressed my concerns. Happy to accept the paper. Some final editing is required before publication.
Author Response
Thanks for your comments. We have made some changes marked in red in revised paper.
Reviewer 3 Report
The authors correctly addressed some comments, but I am still have two major caveats on the paper.
I am still not convinced that duopoly model is an appropriate tool to analyse the enterprise decisions on agricultural markets. Producers are still not enough large to have serious market power. Thus why I wrote earlier that monopolistic competition model would be more appropriate starting point when we like to go beyond the perfect competition model. I could be believe that oligopolistic model can be valid for some niche markets. But, again I could not believe in duopoly model in this context.
Perhaps, I could not clarify my point in the first round. I want to emphasise that consumers are heterogenous in terms of price responsiveness which influence their buying decisions. We can simply assume that poor people are favour convential products because their are cheap, and richer people favour organic products because their behaviour is rather price inelastic.
Author Response
Dear Editors and Reviewers:
Thank you for your letter and for the reviewers’ comments concerning our manuscript entitled “Impact of Green Subsidies on Differential Pricing of Agricultural Products” (Manuscript ID: sustainability-422333). Those comments are all valuable and very helpful for revising and improving our paper, as well as the important guiding significance to our researches. We have studied comments carefully and have made correction which we hope meet with approval. Revised portion are marked in red in the paper.
The main corrections in the paper and the responds to the reviewer’s comments are as following:
Responds to the reviewer’s comments:
Reviewer #3:
1. Response to comment: I am still not convinced that duopoly model is an appropriate tool to analyse the enterprise decisions on agricultural markets. Producers are still not enough large to have serious market power. Thus why I wrote earlier that monopolistic competition model would be more appropriate starting point when we like to go beyond the perfect competition model. I could be believe that oligopolistic model can be valid for some niche markets. But, again I could not believe in duopoly model in this context.
Response: We have found that in both e-commerce platforms like Tmall mall and physical supermarkets like Sam's, the main competing brands of organic and conventional agricultural products are single in some time periods. We also present specific data in the second paragraph of introduction part. Therefore, we have reason to believe that in different markets, there are two kinds of products, organic agricultural products and conventional agricultural products, competing in behavior-based pricing.
2. Response to comment: I want to emphasise that consumers are heterogenous in terms of price responsiveness which influence their buying decisions. We can simply assume that poor people are favour convential products because their are cheap, and richer people favour organic products because their behaviour is rather price inelastic.
Response: We have responded to this comment in the first round: “Many studies show that price is an important factor influence the consumer demand for organic fruit (Chironi et al., 2017; Nandi et al., 2016). We find these in the second paragraph of literature review part. Therefore, we think consumers will choose by price between organic and conventional agricultural products”. We think behavior-based pricing strategy of organic and conventional agricultural products enterprises are for such price-sensitive consumers.
Other changes:
We changed the title of the manuscript for “Behavior-based Pricing of Organic and Conventional Agricultural Products Based on Green Subsidies”.
We tried our best to improve the manuscript and made some changes in the manuscript. These changes will not influence the content and framework of the paper. And here we did not list the changes but marked in red in revised paper. We appreciate for Editors/Reviewers’ warm work earnestly, and hope that the correction will meet with approval.
Once again, thank you very much for your comments and suggestion.
Thank you very much.
Best Regards,
Yours sincerely,
Kan-ying LIU, Yong LAN, Wei LI*, Er-bao CAO
Author Response File: 
Author Response.docx
Round 3
Reviewer 3 Report
I do not agree with the authors, I guess we can not convinced each other. However, I do not want to block the paper to publish.
