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The Demand for California Wine Grapes

Author

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  • Fuller, Kate B.
  • Alston, Julian M.

Abstract

Wine grapes contribute significantly to the economy of California, with a gross production value of more than $2 billion in 2010. Studies on economic issues in the industry require measures of demand response to price, but despite the economic importance of this industry, estimates of elasticities of demand for wine grapes have not been published. We use a flexible-form inverse demand system model to estimate elasticities of demand for wine grapes from three grape-growing regions in California, representing three different quality (price) categories. The resulting estimates of own-price elasticities are high, ranging from −2.6 for grapes in the low-price region to −9.5 for grapes in the high-price region. Such high elasticities are plausible given the role of international trade in wine, and they are consistent with synthetic estimates that we computed based on a combination of economic theory, data on market shares, estimates of some pertinent parameters in the literature, and informed guesstimates of values for other parameters. (JEL Classification: Q11, Q12, Q13)

Suggested Citation

  • Fuller, Kate B. & Alston, Julian M., 2012. "The Demand for California Wine Grapes," Journal of Wine Economics, Cambridge University Press, vol. 7(2), pages 192-212, November.
    • Handle: RePEc:cup:jwecon:v:7:y:2012:i:02:p:192-212_00
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    Citations

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    Cited by:

    1. Sambucci, Olena & Alston, Julian M., 2017. "Estimating the Value of California Wine Grapes," Journal of Wine Economics, Cambridge University Press, vol. 12(2), pages 149-160, May.
    2. Rickard, Brad & Gergaud, Olivier & Hu, Wenjing, 2014. "Trade liberalization in the presence of domestic regulations: Impacts of the proposed EU-U.S. free trade agreement on wine markets," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170462, Agricultural and Applied Economics Association.
    3. Julian M. Alston & Philip G. Pardey, 2014. "Agriculture in the Global Economy," Journal of Economic Perspectives, American Economic Association, vol. 28(1), pages 121-146, Winter.
    4. Alston, Julian M. & Fuller, Kate B. & Kaplan, Jonathan D. & Tumber, Kabir P., 2013. "Economic Consequences of Pierce’s Disease and Related Policy in the California Winegrape Industry," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 38(2), pages 1-29, August.
    5. Hart, Jarrett & Somerville, Scott & Sumner, Daniel A., 2022. "Brewery and Winery By-Product Markets: Environmental and Economic Benefits," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322322, Agricultural and Applied Economics Association.
    6. Gabrielyan, Georgi T., 2017. "Economics of Import Duty and Excise Tax Drawback," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258026, Agricultural and Applied Economics Association.

    More about this item

    JEL classification:

    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness

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