Quality expectations, reputation, and price
AbstractThe impact on price of current product quality and reputation are estimated using data from the market for Bordeaux wine. A model is proposed in which price is a function of current quality and expected quality, where the latter depends on reputation. Equations determining price and expected quality are estimated jointly. The empirical findings show that the price premium associated with better individual and collective (or group) reputation far exceeds that associated with improvements in current quality. As well, the market values collective reputation indicators only to the extent that they are useful predictors of product quality.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 9774.
Date of creation: 1998
Date of revision:
Publication status: Published in Southern Economic Journal 3.64(1998): pp. 628-647
reputation; product quality; information; price;
Find related papers by JEL classification:
- M3 - Business Administration and Business Economics; Marketing; Accounting - - Marketing and Advertising
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
- L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Landon, Stuart & Smith, Constance, 1997. "The Use of Quality and Reputation Indicators by Consumers: The Case of Bordeaux Wine," MPRA Paper 9283, University Library of Munich, Germany.
- Nerlove, Marc, 1995. "Hedonic price functions and the measurement of preferences: The case of Swedish wine consumers," European Economic Review, Elsevier, vol. 39(9), pages 1697-1716, December.
- Franklin Allen, 1984. "Reputation and Product Quality," RAND Journal of Economics, The RAND Corporation, vol. 15(3), pages 311-327, Autumn.
- Karpoff, Jonathan M & Lott, John R, Jr, 1993. "The Reputational Penalty Firms Bear from Committing Criminal Fraud," Journal of Law and Economics, University of Chicago Press, vol. 36(2), pages 757-802, October.
- Shapiro, Carl, 1983. "Premiums for High Quality Products as Returns to Reputations," The Quarterly Journal of Economics, MIT Press, vol. 98(4), pages 659-79, November.
- Ginsburgh, V. & Monzak, M. & Monzak, A., 1992.
"Red Wines of Medoc. What is Wine Tasting Worth?,"
9207, Universite Libre de Bruxelles - C.E.M.E..
- Victor Ginsburgh & A. Monzak & M. Monzak, 2013. "Red wines of Medoc: What is wine tasting worth?," ULB Institutional Repository 2013/152435, ULB -- Universite Libre de Bruxelles.
- GINSBURGH, Victor & MONZAK, M., 1992. "Red wines of Médoc: What is wine testing worth ?," CORE Discussion Papers 1992027, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Pagan, Adrian, 1986.
"Two Stage and Related Estimators and Their Applications,"
Review of Economic Studies,
Wiley Blackwell, vol. 53(4), pages 517-38, August.
- Adrian Pagan, 1985. "Two Stage and Related Estimators and Their Applications," Cowles Foundation Discussion Papers 741, Cowles Foundation for Research in Economics, Yale University.
- Bartik, Timothy J. & Smith, V. Kerry, 1987.
"Urban amenities and public policy,"
Handbook of Regional and Urban Economics,
in: E. S. Mills (ed.), Handbook of Regional and Urban Economics, edition 1, volume 2, chapter 31, pages 1207-1254
- Timothy J. Bartik & V. Kerry Smith, 1996. "Urban Amenities and Public Policy," Book chapters authored by Upjohn Institute researchers, in: V. Kerry Smith (ed.), Estimating Economic Values for Nature: Methods for Non-Market Valuation, pages 271-318 W.E. Upjohn Institute for Employment Research.
- Cooper, Russell & Ross, Thomas W, 1984. "Prices, Product Qualities and Asymmetric Information: The Competitive Case," Review of Economic Studies, Wiley Blackwell, vol. 51(2), pages 197-207, April.
- Combris, Pierre & Lecocq, Sebastien & Visser, Michael, 1997. "Estimation for a Hedonic Price Equation for Bordeaux Wine: Does Quality Matter?," Economic Journal, Royal Economic Society, vol. 107(441), pages 390-402, March.
- Frederic S. Mishkin, 1980.
"Does Anticipated Monetary Policy Matter? An Econometric Investigation,"
NBER Working Papers
0506, National Bureau of Economic Research, Inc.
- Mishkin, Frederic S, 1982. "Does Anticipated Monetary Policy Matter? An Econometric Investigation," Journal of Political Economy, University of Chicago Press, vol. 90(1), pages 22-51, February.
- Borenstein, Severin & Zimmerman, Martin B, 1988. "Market Incentives for Safe Commercial Airline Operation," American Economic Review, American Economic Association, vol. 78(5), pages 913-35, December.
- Russell Davidson & James G. MacKinnon, 1981.
"Tests for Model Specification in the Presence of Alternative Hypotheses: Some Further Results,"
430, Queen's University, Department of Economics.
- MacKinnon, James G. & White, Halbert & Davidson, Russell, 1983. "Tests for model specification in the presence of alternative hypotheses : Some further results," Journal of Econometrics, Elsevier, vol. 21(1), pages 53-70, January.
- repec:fth:louvco:9227 is not listed on IDEAS
- Oxley, Les & McAleer, Michael, 1993. " Econometric Issues in Macroeconomic Models with Generated Regressors," Journal of Economic Surveys, Wiley Blackwell, vol. 7(1), pages 1-40.
- Abel, Andrew B. & Mishkin, Frederic S., 1983.
"An integrated view of tests of rationality, market efficiency and the short-run neutrality of monetary policy,"
Journal of Monetary Economics,
Elsevier, vol. 11(1), pages 3-24.
- Andrew B. Abel & Frederic S. Mishkin, 1981. "An Integrated View of Tests of Rationality, Market Efficiency, and the Short-Run Neutrality of Monetary Policy," NBER Working Papers 0726, National Bureau of Economic Research, Inc.
- Gregg A. Jarrell & Sam Peltzman, 1984.
"The Impact of Product Recalls on the Wealth of Sellers,"
University of Chicago - George G. Stigler Center for Study of Economy and State
33, Chicago - Center for Study of Economy and State.
- Jarrell, Gregg & Peltzman, Sam, 1985. "The Impact of Product Recalls on the Wealth of Sellers," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 512-36, June.
- Pagan, Adrian, 1984. "Econometric Issues in the Analysis of Regressions with Generated Regressors," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 25(1), pages 221-47, February.
- Breusch, T S & Pagan, A R, 1979. "A Simple Test for Heteroscedasticity and Random Coefficient Variation," Econometrica, Econometric Society, vol. 47(5), pages 1287-94, September.
- Gorton, Gary, 1996. "Reputation Formation in Early Bank Note Markets," Journal of Political Economy, University of Chicago Press, vol. 104(2), pages 346-97, April.
- Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
- Klein, Benjamin & Leffler, Keith B, 1981. "The Role of Market Forces in Assuring Contractual Performance," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 615-41, August.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.