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Imports versus Domestic Production: A Demand System Analysis of the U.S. Red Wine Market

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Author Info

  • Seale, James L., Jr.
  • Merchant, Mary

Abstract

This research estimates price and expenditure elasticities of U.S. red wine imports from five countries--Italy, France, Spain, Australia, and Chile--which are compared to elasticities of domestically produced red wine using the first-difference version of the almost ideal demand system (AIDS). Expenditure elasticity results indicate that if U.S. total expenditures on red wine increase, domestic producers would gain most. Empirical results for conditional own-price elasticities of demand indicate that U.S. and Chilean red wines are elastic while U.S. demand for red wines from other countries are highly inelastic. Due to the magnitude of consumption of U.S. domestic red wines relative to imports, an increase in the price of U.S. wine results in a decline in quantity demanded that is six times larger than that for French and Italian red wines and over 20 times larger than that of other import countries. Results suggest that U.S. red-wine producers could increase their total revenue by decreasing prices, while Italian and French producers can increase total revenues by increasing prices.

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Bibliographic Info

Paper provided by University of Florida, International Agricultural Trade and Policy Center in its series Technical Papers with number 15637.

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Date of creation: 2002
Date of revision:
Handle: RePEc:ags:uflotp:15637

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Web page: http://www.iatpc.ifas.ufl.edu/
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Related research

Keywords: imports; red wines; Almost Ideal Demand System; AIDS; Demand and Price Analysis; International Relations/Trade;

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References

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  1. Chalfant, James A, 1987. "A Globally Flexible, Almost Ideal Demand System," Journal of Business & Economic Statistics, American Statistical Association, vol. 5(2), pages 233-42, April.
  2. Seale, James L., Jr. & Sparks, Amy L. & Buxton, Boyd M., 1992. "A Rotterdam Application To International Trade In Fresh Apples: A Differential Approach," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 17(01), July.
  3. Terry L. Kastens & Gary W. Brester, 1996. "Model Selection and Forecasting Ability of Theory-Constrained Food Demand Systems," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(2), pages 301-312.
  4. Seale, James Jr. & Walker, Wayne E. & Kim, In-Moo, 1991. "The demand for energy : Cross-country evidence using the Florida model," Energy Economics, Elsevier, vol. 13(1), pages 33-40, January.
  5. Moschini, GianCarlo, 1995. "Units of Measurement and the 'Stone Index' In Demand System Estimation," Staff General Research Papers 5058, Iowa State University, Department of Economics.
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Citations

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Cited by:
  1. Marette, Stephan & Zago, Angelo M., 2003. "Advertising, Collective Action, And Labeling In The European Wine Markets," Journal of Food Distribution Research, Food Distribution Research Society, vol. 34(03), November.
  2. Lee, Young-Jae & Kennedy, P. Lynn & Hilbun, Brian M., 2010. "Implicit Price And Demand In Oligopolistic Competition: An Application To The U.S. Trout Market," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 60824, Agricultural and Applied Economics Association.
  3. Lee, Young-Jae & Kennedy, P. Lynn & Hilbun, Brian M., 2008. "Import Demand System Analysis Of The South Korean Wine Market With The Source Differentated Aids Model," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6345, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  4. Seale, James L. Jr. & Zhang, Lisha & Traboulsi, Mohamad R., 2013. "Domestic and Foreign Sources of U.S. Demand for Fresh Vegetables and Fruits," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150769, Agricultural and Applied Economics Association.
  5. Okrent, Abigail M. & Alston, Julian M., 2012. "The Demand for Disaggregated Food-Away-from-Home and Food-at-Home Products in the United States," Economic Research Report 132469, United States Department of Agriculture, Economic Research Service.
  6. Seccia, Antonio & Nardone, Gianluca & Stasi, Antonio, 2008. "Analisi del mercato Italiano del vino Syrah
    [Analysis of Italian Market of Syrah Wine]
    ," MPRA Paper 14665, University Library of Munich, Germany, revised 15 Mar 2009.
  7. Muhammad, Andrew & Jones, Keithly G., 2009. "An Assessment of Dynamic Behavior in the U.S. Catfish Market: An Application of the Generalized Dynamic Rotterdam Model," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 41(03), December.
  8. Harri, Ardian & Muhammad, Andrew & Anderson, John D., 2008. "Estimating a Demand System with Seasonally Differenced Data," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6427, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  9. Thompson, Stanley R. & Sam, Abdoul G., 2008. "Country of Origin Advertising and U.S. Wine Imports," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6553, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  10. Oyinbo, O. & Omolehin, R. A. & Abdulsalam, Z., 2013. "Analysis of the Demand for Rice in Kaduna State, Nigeria," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 5(3), September.
  11. Davis, Timothy R. & Ahmadi-Esfahani, Fredoun Z. & Iranzo, Susana, . "Demand under product differentiation: an empirical analysis of the US wine market," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society.
  12. Poudel, Pawan & Keithly, Walter R., Jr., 2008. "Analysis of United States and European Union Import Demand for Shrimp," 2008 Annual Meeting, February 2-6, 2008, Dallas, Texas 6748, Southern Agricultural Economics Association.
  13. Castellon, Cesar E. & Boonsaeng, Tullaya & Carpio, Carlos E., 2012. "Demand System Estimation in the Absence of Price Data: an Application of Stone-Lewbel Price Indices," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124819, Agricultural and Applied Economics Association.
  14. Antonis Michis & Anna Markidou, 2013. "Determinants of retail wine prices: evidence from Cyprus," Empirical Economics, Springer, vol. 45(1), pages 267-280, August.

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