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Does Product Diversity Signal Bargains in Australian Wine?

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  • Horowitz, Ira
  • Lockshin, Larry

Abstract

The residuals from a set of linear regression equations built to explain the quality of a bottle of Australian wine via eight quality signals are examined to determine whether there is any relationship between their signs for individual producers and the diversity of their offerings. Product diversity is found to be a fault-ridden signal of a quality-bargain, which we define as a bottle of wine whose quality rating exceeds its regression-based expectation. Indeed, to the extent that the signal does impart useful information, the message would be that consumers are less likely to get their money's worth the greater is the diversity of the producer's offerings.

Suggested Citation

  • Horowitz, Ira & Lockshin, Larry, 2006. "Does Product Diversity Signal Bargains in Australian Wine?," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IFAMA), vol. 9(01).
  • Handle: RePEc:ags:ifaamr:8204
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    File URL: http://purl.umn.edu/8204
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    References listed on IDEAS

    as
    1. Victor Ginsburgh, 2003. "Awards, Success and Aesthetic Quality in the Arts," Journal of Economic Perspectives, American Economic Association, vol. 17(2), pages 99-111, Spring.
    2. 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.
    3. Pierre Combris & Sebastien Lecocq & Michael Visser, 2000. "Estimation of a hedonic price equation for Burgundy wine," Applied Economics, Taylor & Francis Journals, vol. 32(8), pages 961-967.
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