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Price Dispersion in Wines

Author

Listed:
  • Rockett, Kate
  • Cardebat, Jean-Marie
  • Gergaud, Olivier
  • Régibeau, Pierre

Abstract

We investigate price dispersion in restaurant sales of wine. We measure empirically the change in price dispersion as competition varies, finding that price dispersion increases with competition. We then propose a spatial model capturing the unique features of restaurant dining to explain this empirical regularity. The model reveals an indirect effect flowing through the price of food, which is announced and known by customers, to the price of wine, which is only revealed once the customer enters the restaurant and receives the wine list. The results add to the literature on “add ons†and price dispersion in bundled good markets.

Suggested Citation

  • Rockett, Kate & Cardebat, Jean-Marie & Gergaud, Olivier & Régibeau, Pierre, 2021. "Price Dispersion in Wines," CEPR Discussion Papers 16784, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:16784
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    More about this item

    Keywords

    Price dispersion; Wine; Restaurant; Spatial competition;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L90 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - General
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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