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The Pricing of Experience Goods: The Example of en primeur Wine

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  • Héla Hadj Ali
  • Céline Nauges

Abstract

The market for “primeur” wine in the Bordeaux region allows producers to sell wine that is still in barrels. As with all experience goods, producers send quality signals to uninformed buyers. Using original data on Bordeaux wines, we show that the pricing behavior of producers depends to a large extent on their reputation, and much less on short-term changes in quality (as measured by experts' grades). We also find that the primeur price has an informative role, since a 10% increase in primeur price leads to a 3% increase in prices on the market for bottled wine. Copyright 2007, Oxford University Press.

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File URL: http://hdl.handle.net/10.1111/j.1467-8276.2007.00965.x
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Bibliographic Info

Article provided by Agricultural and Applied Economics Association in its journal American Journal of Agricultural Economics.

Volume (Year): 89 (2007)
Issue (Month): 1 ()
Pages: 91-103

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Handle: RePEc:oup:ajagec:v:89:y:2007:i:1:p:91-103

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Cited by:
  1. Deselnicu, Oana C. & Costanigro, Marco & Souza-Monteiro, Diogo M. & McFadden, Dawn Thilmany, 2013. "A Meta-Analysis of Geographical Indication Food Valuation Studies: What Drives the Premium for Origin-Based Labels?," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 38(2), August.
  2. HélaHadj Ali & Sébastien Lecocq & Michael Visser, 2008. "The Impact of Gurus: Parker Grades and "En Primeur" Wine Prices," Economic Journal, Royal Economic Society, vol. 118(529), pages F158-F173, 06.
  3. Antonis Michis & Anna Markidou, 2013. "Determinants of retail wine prices: evidence from Cyprus," Empirical Economics, Springer, vol. 45(1), pages 267-280, August.
  4. Dubois, Pierre & Nauges, Céline, 2006. "Identifying the Effect of Unobserved Quality and Experts' Reviews in the Pricing of Experience Goods: Empirical Application on Bordeaux Wine," IDEI Working Papers 395, Institut d'Économie Industrielle (IDEI), Toulouse.
  5. Claudio Kugler, 2010. "Parker, Wine Spectator and Retail Prices of Bordeaux Wines in Switzerland: Results from Panel Data 1995 - 2000," Working papers 2010/09, Faculty of Business and Economics - University of Basel.
  6. Teuber, Ramona, 2008. "Geographical Indications and the Value of Reputation - Empirical Evidence for Cafe de Marcala," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 43835, European Association of Agricultural Economists.
  7. Giovanni Mastrobuoni & Franco Peracchi & Aleksey Tetenov, 2012. "Price as a signal of product quality: Some experimental evidence," EIEF Working Papers Series 1214, Einaudi Institute for Economics and Finance (EIEF), revised Oct 2012.

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