Taste or reputation: what drives market prices in the wine industry? Estimation of a hedonic model for Italian premium wines
AbstractThe aim of this article is to provide new evidence on the factors affecting wine prices on both methodological and factual grounds. On the methodological ground, this study is the first to apply a general Box-Cox transformation within the context of hedonic models which exploit all the variables (objective and sensorial characteristics, reputation) pointed out by previous literature as relevant in driving market prices. On the factual ground, the article fills the lack of empirical evidence on the issue for Italy, one of the leading wine producers, by using a large data set on two premium quality wines (Barolo and Barbaresco) covering the 1995-1998 vintages. Our results support the evidence obtained using data from other countries, showing that sensorial traits, the reputation of wines and producers, as well as objective variables are all important factors influencing the consumers' willingness to pay. More importantly, by resorting to a nonnested statistical test (Vuong, 1989) we compare two alternative specifications (taste vs. reputation) and find that the reputation model significantly outperforms the taste one, whereby suggesting that a greater amount of information on how the wine price is formed is contained in the reputation specification.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal Applied Economics.
Volume (Year): 41 (2009)
Issue (Month): 17 ()
Contact details of provider:
Web page: http://www.tandfonline.com/RAEC20
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Agostino, Mariarosaria & Trivieri, Francesco, 2014. "Geographical indication and wine exports. An empirical investigation considering the major European producers," Food Policy, Elsevier, vol. 46(C), pages 22-36.
- Antonis Michis & Anna Markidou, 2013. "Determinants of retail wine prices: evidence from Cyprus," Empirical Economics, Springer, vol. 45(1), pages 267-280, August.
- Eugenio Brentari & Rosella Levaggi, 2010. "Hedonic Price for the Italian Red Wine: a Panel Analysis," Working Papers 1001, University of Brescia, Department of Economics.
- Florkowski, Wojciech J. & Carew, Richard & He, Senhui, 2008. "British Columbia Consumers' Preferences for Italian Wines: Reputation and Vintage Effects on Wine Quality and Prices," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44403, European Association of Agricultural Economists.
- Dieter Pennerstorfer, 2014. "Price and Quality Competition in Spatial Markets. The Case of Camping Sites," WIFO Working Papers 466, WIFO.
- Dakshina De Silva & Caroline Elliott & Robert Simmons, 2013. "Restaurant wars," Working Papers 44312700, Lancaster University Management School, Economics Department.
- Corsi, Alessandro & Strøm, Steinar, 2013. "The Price Premium for Organic Wines: Estimating a Hedonic Farm-gate Price Equation," Memorandum 07/2013, Oslo University, Department of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty).
If references are entirely missing, you can add them using this form.