The Premium for Organic Wines: Estimating a Hedonic Price Equation from the Producer Side
AbstractOrganic production techniques are an increasing, though minor so far, part of agriculture, and organic wines are increasingly produced and appreciated. Nevertheless, since the organic technique is more costly, a crucial question is whether organic wines benefit from a price premium. In this paper a hedonic price function has been estimated for Piedmont organic and conventional wines. Unlike the current literature on the determinants of wine prices, we used data on the production side in addition to variables of interest for consumers. One question was whether farm and operator’s characteristics of no interest for consumers affect wine prices. The second question was whether organic wine obtains a price premium relative to conventional wine. Our results show that, along with characteristics that are of interest to consumers, like the appellation and the variety, some farm and producer characteristics that are not directly relevant for consumers do significantly affect wine prices. We also find that, though there is not a premium in the sense of an addition to other price components, given farmers’ and wines’ characteristics, organic wines do command higher prices.
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Bibliographic InfoPaper provided by Oslo University, Department of Economics in its series Memorandum with number 06/2009.
Length: 22 pages
Date of creation: 20 Feb 2009
Date of revision:
Contact details of provider:
Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Phone: 22 85 51 27
Fax: 22 85 50 35
Web page: http://www.oekonomi.uio.no/indexe.html
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Organic wine; hedonic price; price premium; Piedmont;
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- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
This paper has been announced in the following NEP Reports:
- NEP-AGR-2009-09-11 (Agricultural Economics)
- NEP-ALL-2009-09-11 (All new papers)
- NEP-MKT-2009-09-11 (Marketing)
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