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Who Gains from Australian Generic Wine Promotion and R&D?

In: The International Economics of Wine

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  • Xueyan Zhao
  • Kym Anderson
  • Glyn Wittwer

Abstract

The present paper estimates the distributions of aggregate returns from different types of research and promotion investments by the Australian grape and wine industry among grapegrowers, winemakers, domestic and foreign consumers, and the tax office. The results show that most of the gains from cost-reducing R&D in grape and wine production go to producers and that producers get a far larger share of the benefit from export promotion than from domestic promotion. Foreign consumers of Australian wine also enjoy a significant share of the benefits from Australian R&D. Sensitivity analysis shows that the key results hold for a wide range of parameter values.

Suggested Citation

  • Xueyan Zhao & Kym Anderson & Glyn Wittwer, 2019. "Who Gains from Australian Generic Wine Promotion and R&D?," World Scientific Book Chapters, in: Kym Anderson (ed.), The International Economics of Wine, chapter 9, pages 189-223, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789811202094_0009
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    1. Zhao, Xueyan & Griffiths, William E. & Griffith, Garry R. & Mullen, John D., 2000. "Probability distributions for economic surplus changes: the case of technical change in the Australian wool industry," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 44(1), pages 1-24.
    2. J. M. Alston & G. M. Scobie, 1983. "Distribution of Research Gains in Multistage Production Systems: Comment," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 65(2), pages 353-356.
    3. Zhao, Xueyan & Mullen, John D. & Griffith, Garry R. & Griffiths, William E. & Piggott, Roley R., 2000. "An Equilibrium Displacement Model of the Australian Beef Industry," Research Reports 28007, New South Wales Department of Primary Industries Research Economists.
    4. Anderson, Kym & Nielsen, Chantal, 2004. "Economic Effects of Agricultural Biotechnology Research in the Presence of Price-Distorting Policies," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 19, pages 374-394.
    5. Xueyan Zhao, 2003. "Who bears the burden and who receives the gain?-The case of GWRDC R&D investments in the Australian grape and wine industry," Agribusiness, John Wiley & Sons, Ltd., vol. 19(3), pages 355-366.
    6. J. W. Freebairn & J. S. Davis & G. W. Edwards, 1983. "Distribution of Research Gains in Multistage Production Systems: Reply," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 65(2), pages 357-359.
    7. Glyn Wittwer & Kym Anderson, 2019. "Impact of the GST and Wine Tax Reform on Australia’s Wine Industry: A CGE Analysis," World Scientific Book Chapters, in: Kym Anderson (ed.), The International Economics of Wine, chapter 17, pages 415-435, World Scientific Publishing Co. Pte. Ltd..
    8. J. W. Freebairn & J. S. Davis & G. W. Edwards, 1982. "Distribution of Research Gains in Multistage Production Systems," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 64(1), pages 39-46.
    9. Michael K. Wohlgenant, 1989. "Demand for Farm Output in a Complete System of Demand Functions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(2), pages 241-252.
    10. James, Jennifer S. & Alston, Julian M., 2002. "Taxes and quality: A market-level analysis," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 46(3), pages 1-29.
    11. Michael K. Wohlgenant, 1993. "Distribution of Gains from Research and Promotion in Multi-Stage Production Systems: The Case of the U.S. Beef and Pork Industries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(3), pages 642-651.
    12. John D. Mullen & Julian M. Alston & Michael K. Wohlgenant, 1989. "The Impact Of Farm And Processing Research On The Australian Wool Industry," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 33(1), pages 32-47, April.
    13. Glyn Wittwer & Nick Berger & Kym Anderson, 2019. "A Model of the World’s Wine Markets," World Scientific Book Chapters, in: Kym Anderson (ed.), The International Economics of Wine, chapter 1, pages 3-26, World Scientific Publishing Co. Pte. Ltd..
    14. Garth J. Holloway, 1989. "Distribution of Research Gains in Multistage Production Systems: Further Results," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(2), pages 338-343.
    15. R. K. Lindner & F. G. Jarrett, 1978. "Supply Shifts and the Size of Research Benefits," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 60(1), pages 48-58.
    16. Avinash Dixit & Victor D. Norman, 1979. "Advertising and Welfare: Reply," Bell Journal of Economics, The RAND Corporation, vol. 10(2), pages 728-729, Autumn.
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    Cited by:

    1. Xueyan Zhao & Mark N. Harris, 2004. "Demand for Marijuana, Alcohol and Tobacco: Participation, Levels of Consumption and Cross‐equation Correlations," The Economic Record, The Economic Society of Australia, vol. 80(251), pages 394-410, December.
    2. Cook, David C., 2008. "Benefit cost analysis of an import access request," Food Policy, Elsevier, vol. 33(3), pages 277-285, June.
    3. Mounter, Stuart W. & Griffith, Garry R. & Piggott, Roley R. & Mullen, John D., 2005. "The Relative Payoffs From R&D and Generic Advertising Expenditure by the Australian Pig Industry," Working Papers 12943, University of New England, School of Economics.
    4. Günter Schamel & Kym Anderson, 2019. "Wine Quality and Varietal, Regional and Winery Reputations: Hedonic Prices for Australia and New Zealand," World Scientific Book Chapters, in: Kym Anderson (ed.), The International Economics of Wine, chapter 10, pages 225-253, World Scientific Publishing Co. Pte. Ltd..
    5. Xueyan Zhao, 2003. "Who bears the burden and who receives the gain?-The case of GWRDC R&D investments in the Australian grape and wine industry," Agribusiness, John Wiley & Sons, Ltd., vol. 19(3), pages 355-366.
    6. Mounter, Stuart W. & Griffith, Garry R. & Piggott, Roley R. & Fleming, Euan M. & Zhao, Xueyan, 2008. "An Equilibrium Displacement Model of the Australian Sheep and Wool Industries," Research Reports 37663, New South Wales Department of Primary Industries Research Economists.
    7. Lana Awada & Peter W. B. Phillips, 2021. "The distribution of returns from land efficiency improvement in multistage production systems," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 69(1), pages 73-92, March.
    8. Henderson, Benjamin B. & Henry, Lynn A. & MacAulay, T. Gordon, 2006. "Investment and Change in the Coconut Industry of North Sulawesi: An Equilibrium Displacement Analysis," 2006 Conference (50th), February 8-10, 2006, Sydney, Australia 139789, Australian Agricultural and Resource Economics Society.
    9. Benjamin Henderson & Lynn Henry & Gordon MacAulay & Jen Tatuh, 2010. "Potential Payoff from R&D in the Coconut Industry of North Sulawesi, Indonesia," Asian Economic Journal, East Asian Economic Association, vol. 24(1), pages 69-85, March.
    10. Demont, Matty & Rutsaert, Pieter & Ndour, Maimouna & Verbeke, Wim, 2013. "Reversing Urban Bias in African Rice Markets: Evidence from Senegal," World Development, Elsevier, vol. 45(C), pages 63-74.
    11. Mounter, Stuart W. & Griffith, Garry R. & Piggott, Roley R., 2004. "The Payoff from Generic Advertising by the Australian Pig Industry in the Presence of Trade," Working Papers 12946, University of New England, School of Economics.
    12. Wittwer, Glyn & McKirdy, Simon & Wilson, Ryan, 2005. "Regional economic impacts of a plant disease incursion using a general equilibrium approach," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 49(1), pages 1-15.
    13. Omoke, Philip C., 2006. "Trade Policy Reforms and Rural Poverty in Nigeria," Conference papers 331445, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    14. Mounter, Stuart W. & Griffith, Garry R. & Piggott, Roley R., 2005. "The Payoff from Generic Advertising by the Australian Pig Industry in the Presence of Trade," Australasian Agribusiness Review, University of Melbourne, Department of Agriculture and Food Systems, vol. 13.
    15. Glyn Wittwer & Simon McKirdy & Ryan Wilson, 2003. "Analysing the Economic Impacts of a Plant Disease Incursion Using a General Equilibrium Approach," Centre of Policy Studies/IMPACT Centre Working Papers op-97, Victoria University, Centre of Policy Studies/IMPACT Centre.
    16. Gergaud, Olivier & Livat, Florine & Rickard, Bradley & Warzynski, Frederic, 2016. "The Costs and Benefits of Collective Reputation: Who gains and who loses from generic promotion programs?," Working Papers 231135, American Association of Wine Economists.
    17. Demont, Matty & Fiamohe, Rose & Kinkpé, A. Thierry, 2017. "Comparative Advantage in Demand and the Development of Rice Value Chains in West Africa," World Development, Elsevier, vol. 96(C), pages 578-590.
    18. Xayavong, Vilaphonh & Radhakrishnan, Manju & Kingwell, Ross S., 2013. "Development Strategies for a Premium Wine Region of Australia: an application of value chain modelling," 2013 Conference (57th), February 5-8, 2013, Sydney, Australia 152186, Australian Agricultural and Resource Economics Society.
    19. Borrell, Brent & Jiang, Tingsong & Pearce, David & Gould, Ian, 2014. "Payoffs from research and development along the Australian food value chain: a general equilibrium analysis," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 58(3), July.
    20. Rathnayake, Chinthani & Griffith, Garry & Sinnett, Alexandria & Malcolm, Bill & Farquharson, Bob, 2023. "Developing an Equilibrium Displacement Model of the Sri Lankan Tea Industry," Australasian Agribusiness Review, University of Melbourne, Department of Agriculture and Food Systems, vol. 31(2), April.
    21. Simpson, S. & Dargusch, P., 2010. "Classifying public benefit in Australian agricultural research," Australasian Agribusiness Review, University of Melbourne, Department of Agriculture and Food Systems, vol. 18, pages 1-13.
    22. Nahanga Verter & Lea Hasíková, 2019. "The Performance of Grape Production in the Czech Republic," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 67(1), pages 333-342.

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    More about this item

    Keywords

    Wine Globalization; Australia's Wine Internationalization; Wine Markets in Asia; Wine Price Distortions; Modelling Global Wine Markets;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco

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