Economic Geography Of The U.S. Wine Industry
AbstractThis study examines wine trade in the United States to assess the impact of higher energy costs on the average distance of world and U.S. regional wine shipments, or wine miles, to U.S. markets. To examine this issue we calibrate a spatial equilibrium model of the U.S. wine industry. The model accounts for (i) consumer preferences for variety, (ii) monopolistic-competition/increasing-returns in the production of differentiated wine products, and (iii) transportation costs. Wine production areas are grouped into nine U.S. and seven world producing regions. U.S. markets are grouped into the 50 States plus the District of Columbia. Results indicate that U.S. consumers are willing to pay substantial transportation costs in order to consume a wide variety of wines from premier U.S. and world wine growing regions. As increasing energy costs drive up the price of freight services, wine mile impacts are limited by the degree of regional product differentiation in U.S. and world producing regions.
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Bibliographic InfoPaper provided by American Association of Wine Economists in its series Working Papers with number 43891.
Date of creation: Sep 2008
Date of revision:
Demand and Price Analysis; Environmental Economics and Policy; Resource /Energy Economics and Policy;
This paper has been announced in the following NEP Reports:
- NEP-AGR-2008-11-18 (Agricultural Economics)
- NEP-ALL-2008-11-18 (All new papers)
- NEP-ENV-2008-11-18 (Environmental Economics)
- NEP-GEO-2008-11-18 (Economic Geography)
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