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Wine Quality Differentials In Hedonic Grape Pricing

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  • A. Golan
  • H. Shalit

Abstract

The paper focuses on identification and evaluation of wine quality characteristics of grapes. A pricing schedule that rewards producers for quality attributes is developed. This quality‐based pricing schedule would serve to reduce the production of poor‐quality wines by giving farmers a correct and powerful incentive to provide better grapes. The research evaluates the proposed grape price schedule in two steps. The hedonic qualities of Israeli grapes are estimated by relating the contribution of each grape characteristic to wine quality. Then the price of wine quality is estimated, and the hedonic prices for Israeli grapes are calculated. Results show that the current pricing system pays little premium for a better‐quality product.

Suggested Citation

  • A. Golan & H. Shalit, 1993. "Wine Quality Differentials In Hedonic Grape Pricing," Journal of Agricultural Economics, Wiley Blackwell, vol. 44(2), pages 311-321, May.
  • Handle: RePEc:bla:jageco:v:44:y:1993:i:2:p:311-321
    DOI: 10.1111/j.1477-9552.1993.tb00274.x
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    File URL: https://doi.org/10.1111/j.1477-9552.1993.tb00274.x
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    References listed on IDEAS

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    1. W. M. Gorman, 1980. "A Possible Procedure for Analysing Quality Differentials in the Egg Market," Review of Economic Studies, Oxford University Press, vol. 47(5), pages 843-856.
    2. George W. Ladd & Marvin B. Martin, 1976. "Prices and Demands for Input Characteristics," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 58(1), pages 21-30.
    3. A. Michael Spence, 1975. "Monopoly, Quality, and Regulation," Bell Journal of Economics, The RAND Corporation, vol. 6(2), pages 417-429, Autumn.
    4. Michael K. Wohlgenant, 1982. "Inventory Adjustment and Dynamic Winery Behavior," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 64(2), pages 222-231.
    5. 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..
    6. Phlips,Louis, 1983. "The Economics of Price Discrimination," Cambridge Books, Cambridge University Press, number 9780521283946.
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