Development Uncorked: Reputation Acquisition in the New Market for Chilean Wines in the UK
AbstractThis paper studies learning effects in new markets using a panel of relationships between Chilean wineries and distributors in the UK. Controlling for winery, distributors and time effects, FOB prices increase by at least three percent with every additional year in a relationship while export volumes do not drop. The implied shift in demand is not explained by improvements in product quality, or by distributor, product and match-specific effects. FOB prices responses to relationship specific exogenous changes in marketing costs induced by exchange rates dynamics suggest that wineries bargaining power increases over time. Following their first relationship in the market, wineries are re-matched to distributors of higher quality. The evidence suggests that learning about wineries is an important determinant of the positive age effects on FOB prices but also that learning takes considerably long time. Policy implications are discussed.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7698.
Date of creation: Feb 2010
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Find related papers by JEL classification:
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
- M31 - Business Administration and Business Economics; Marketing; Accounting - - Marketing and Advertising - - - Marketing
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
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