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Red Wines of Medoc. What is Wine Tasting Worth?

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Author Info

  • Ginsburgh, V.
  • Monzak, M.
  • Monzak, A.

Abstract

Winemaking is a highly complex technology. It needs inputs over which there is no control (good weather conditions), initial endowments which can hardly be modified (soil, exposure of the slopes), inputs which take 20 to 30 years before producing good quality outputs (vines), manual operations (picking), mechanical operations (rushing, racking) and chemical processes (during fermentation). In the paper, we disentangle the production technology, and try to quantify the impact on prices (qualities) of each of the many inputs (including weather conditions) and steps used in producing wine in Médoc. We show that technology and weather conditions are able to explain two thirds of the variance of prices; when reputation effects (based on the wine classification made in 1855) are included, this proportion rises to almost 85%. This suggests either that "classified" producers are able to charge higher prices, or that the classification is a measure of quality reflected by prices. We also show that two of the more recent attempts at classifying wines are not as good in explaining prices than the official (and old) 1855 grading.

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Bibliographic Info

Paper provided by Universite Libre de Bruxelles - C.E.M.E. in its series Papers with number 9207.

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Length: 32 pages
Date of creation: 1992
Date of revision:
Handle: RePEc:fth:ulbeme:9207

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Postal: UNIVERSITE LIBRE DE BRUXELLES, CENTRE D'ECONOMIE MATHEMATIQUE ET D'ECONOMETRIE, C.P. 139, 50 AVE F.D. ROOSEVELT 1050 BRUXELLES.
Phone: (32 2) 650 30 75
Fax: (32 2) 650 44 75
Web page: http://ecares.org/
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Keywords: wine ; production;

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Cited by:
  1. Ali, Hela Hadj & Lecocq, Sebastien & Visser, Michael, 2007. "The Impact of Gurus: Parker Grades and EN PRIMEUR Wine Prices," Working Papers 37292, American Association of Wine Economists.
  2. Gergaud, Olivier & Ginsburgh, Victor, 2007. "Natural endowments, production technologies, and the quality of wines in Bordeaux. Is it possible to produce wine on paved roads?," Working Papers 37294, American Association of Wine Economists.
  3. Landon, Stuart & Smith, Constance, 1998. "Quality expectations, reputation, and price," MPRA Paper 9774, University Library of Munich, Germany.

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