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Towards a Differentiated Modelling of Origin Effects in Hedonic Analysis:An Application to Auction Prices of Specialty Coffee

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  • Teuber, Ramona
  • Herrmann, Roland

Abstract

Origin 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 on 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. As reputation and the objective product quality are particularly important on markets of differentiated, high-quality foods and beverages we analyze auction markets of 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 Info

Paper provided by International Association of Agricultural Economists in its series 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil with number 126235.

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Date of creation: 2012
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Handle: RePEc:ags:iaae12:126235

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Keywords: Hedonic Models; Specialty Coffee; Origin Effects; Reputation; Sensory Quality; Demand and Price Analysis; Industrial Organization; International Relations/Trade; Marketing; Research Methods/ Statistical Methods; Q11; Q13; Q17; D44;

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  1. Joachim Zietz & Emily N. Zietz & G. Stacy Sirmans., 2007. "Determinants of House Prices: A Quantile Regression Approach," Working Papers 200706, Middle Tennessee State University, Department of Economics and Finance.
  2. Donnet, M. Laura & Weatherspoon, Dave D. & Hoehn, John P., 2007. "Price Determinants in Top Quality E-Auctioned Specialty Coffees," Staff Papers 9310, Michigan State University, Department of Agricultural, Food, and Resource Economics.
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Cited by:
  1. Leufkens, Daniel & Schröck, Rebecca, 2013. "Regulierungspolitische Effekte geschützter geografischer Herkunftsangaben der EU in einer dynamischen und qualitätspolitischen Perspektive," 53rd Annual Conference, Berlin, Germany, September 25-27, 2013 156119, German Association of Agricultural Economists (GEWISOLA).

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