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Hierarchical Bayesian Hedonic Regression Analysis of Japanese Rice Wine: Price is Right?

Author

Listed:
  • Wakuo Saito

    (Graduate School of Economics, Keio University)

  • Teruo Nakatsuma

    (Faculty of Economics, Keio University)

Abstract

This research formulates a hedonic pricing model for Japanese rice wine, sake, via hierarchical Bayesian modeling, estimating it with a Markov chain Monte Carlo (MCMC) method. The data used in the estimation are obtained from Rakuten, the largest online shopping site in Japan. Flavor indicators, premium categories, rice breeds, and regional dummy variables are used as pricing factors. The Bayesian estimation of the model employs an ancillarity-sufficiency interweaving strategy to improve the sampling efficiency of MCMC. The estimation results indicate that Japanese consumers value sweeter sake more and the price reflects the cost of pre-processing rice only for the most luxurious category. No distinctive differences are identified among rice breeds or regions in the hedonic pricing model.

Suggested Citation

  • Wakuo Saito & Teruo Nakatsuma, 2021. "Hierarchical Bayesian Hedonic Regression Analysis of Japanese Rice Wine: Price is Right?," Keio-IES Discussion Paper Series 2021-019, Institute for Economics Studies, Keio University.
    • Handle: RePEc:keo:dpaper:2021-019
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    sake; rice breed; hierarchical Bayesian modeling; hedonic pricing model; Markov chain Monte Carlo;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • 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

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