Towards a differentiated modeling of origin effects in hedonic analysis: An application to auction prices of specialty coffee
AbstractOrigin matters. This has been shown by numerous studies using either discrete choice or hedonic approaches to derive implicit prices for origin as a product attribute. In most of the hedonic studies, intercept dummies were introduced for specific regional origins and statistically significant coefficients of those variables were seen as an indication of either a superior or inferior reputation, compared to products from other origins. We argue that hedonic pricing models of this type may be too simple to detect the true origin effects if assessments of a product’s sensory quality are available and interact with prior beliefs about reputation. Based on a supply-and-demand framework to explain auction prices, a reduced-form hedonic pricing model is suggested that includes intercept- as well as slope-dummy effects of the regional origin. Because reputation and the objective product quality are particularly important for markets of differentiated, high-quality foods and beverages, we analyze electronic auction markets for specialty coffees. The findings for the Cup of Excellence data reveal that it is important to distinguish reputation, sensory quality, and their interaction as determinants of coffee auction prices, as well as varying origin impacts across market segments.
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Bibliographic InfoArticle provided by Elsevier in its journal Food Policy.
Volume (Year): 37 (2012)
Issue (Month): 6 ()
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Web page: http://www.elsevier.com/locate/foodpol
Hedonic models; Specialty coffee; Origin effects; Reputation; Sensory quality;
Other versions of this item:
- Teuber, Ramona & Herrmann, Roland, 2012. "Towards a Differentiated Modelling of Origin Effects in Hedonic Analysis:An Application to Auction Prices of Specialty Coffee," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126235, International Association of Agricultural Economists.
- Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
- Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
- Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
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