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Price and Quality in the California Wine Industry: An Empirical Investigation

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  • Lima, Tony

Abstract

This paper examines price and quality in the California wine industry using medals won in nine tasting events in 1995 as indexes of quality. For each tasting event, there were four possible medals: double gold, gold, silver, and bronze. Using stepwise least squares regression analysis, we estimate hedonic price functions for the 1884 wines in our sample treating quality as exogenous to price. We also look at results for some wine types, including chardonnay and cabernet sauvignon. The results are largely as expected. The San Francisco Wine Competition appears to be the best predictor of quality with the Orange County and Sacramento (California State Fair) competitions the second best predictors of quality. (JEL Classifi cation: D4, L6)

Suggested Citation

  • Lima, Tony, 2006. "Price and Quality in the California Wine Industry: An Empirical Investigation," Journal of Wine Economics, Cambridge University Press, vol. 1(2), pages 176-190, October.
    • Handle: RePEc:cup:jwecon:v:1:y:2006:i:02:p:176-190_00
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    Citations

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    Cited by:

    1. Rachel A. Smith & C. Nicholas McKinney & Steven B. Caudill & Franklin G. Mixon, 2016. "Consumer ratings and the pricing of experience goods: hedonic regression analysis of beer prices," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 4(1), pages 1-10, December.
    2. Eugenio Brentari & Rosella Levaggi, 2010. "Hedonic Price for the Italian Red Wine: a Panel Analysis," Working Papers 1001, University of Brescia, Department of Economics.
    3. Oczkowski Edward, 2022. "Price Premiums and Discounts for Australian Sparkling Wines," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 20(1), pages 25-38, May.
    4. Almenberg, Johan & Dreber, Anna, 2011. "When Does the Price Affect the Taste? Results from a Wine Experiment," Journal of Wine Economics, Cambridge University Press, vol. 6(1), pages 111-121, January.
    5. Raj Chandra & Gabriel E. Lade & GianCarlo Moschini, 2021. "Geographical Indications and Welfare: Evidence from the US Wine Market," Center for Agricultural and Rural Development (CARD) Publications 21-wp628, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    6. San Martin, Guillermo S. & Brümmer, Bernhard & Troncoso, Javier L., 2008. "Determinants Of Argentinean Wine Prices In The U.S. Market," Working Papers 37327, American Association of Wine Economists.
    7. Bicknell, Kathryn & MacDonald, Ian, 2009. "How Important is Reputation for New Zealand Wine Makers?," 2009 Conference, August 27-28, 2009, Nelson, New Zealand 115717, New Zealand Agricultural and Resource Economics Society.
    8. Oczkowski, Edward, 2019. "The relation between Australian wine show results and prices," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 60(2), July.
    9. Emmanuel Paroissien & Michael Visser, 2020. "The Causal Impact of Medals on Wine Producers' Prices and the Gains from Participating in Contests," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(4), pages 1135-1153, August.

    More about this item

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L6 - Industrial Organization - - Industry Studies: Manufacturing

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