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Country of Origin Advertising and U.S. Wine Imports

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  • Thompson, Stanley R.
  • Sam, Abdoul G.

Abstract

The objective of this paper is to investigate the impact of media advertising on the US consumption of imported wine. A panel data of seven countries and twelve years from 1994-2005 is used to estimate the demand function for US wine imports. Our empirical analysis reveals evidence of strong price and advertising effects of domestic and imported wines on imported quantities; the advertising of imported wines significantly increases the quantity of imports while the advertising of domestic wines has a strong depressing effect on imported wine volumes. Our short-run import demand price and advertising elasticity estimates are -0.406 and 0.109 for imports and 0.654 and -0.370 for domestic wines, respectively. Other determinants such as population, real income and country specific fixed effects are also found significant. Based on our model estimates, we compute the marginal return to advertising to be $2.68 on average for the six importing countries and $3.40 for the U.S.

Suggested Citation

  • Thompson, Stanley R. & Sam, Abdoul G., 2008. "Country of Origin Advertising and U.S. Wine Imports," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6553, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea08:6553
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    File URL: http://purl.umn.edu/6553
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    References listed on IDEAS

    as
    1. Pompelli, Gregory K & Heien, Dale, 1991. "Discrete/Continuous Consumer Demand Choices: An Application to the U.S. Domestic and Imported White Wine Markets," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 18(1), pages 117-130.
    2. repec:oup:revage:v:25:y:2003:i:1:p:187-202. is not listed on IDEAS
    3. Jon P. Nelson, 1999. "Broadcast Advertising and U.S. Demand for Alcoholic Beverages," Southern Economic Journal, Southern Economic Association, vol. 65(4), pages 774-790, April.
    4. Craig A. Gallet, 2007. "The demand for alcohol: a meta-analysis of elasticities," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, pages 121-135.
    5. James L. Seale & Mary A. Marchant & Alberto Basso, 2003. "Imports versus Domestic Production: A Demand System Analysis of the U.S. Red Wine Market," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 25(1), pages 187-202.
    6. Ahn, Seung C. & Schmidt, Peter, 1995. "Efficient estimation of models for dynamic panel data," Journal of Econometrics, Elsevier, vol. 68(1), pages 5-27, July.
    7. Gary W. Williams, 1985. "Returns to US soybean export market development," Agribusiness, John Wiley & Sons, Ltd., vol. 1(3), pages 243-263.
    8. Henry W. Kinnucan & Hailong Cai, 2010. "A Benefit-Cost Analysis of U.S. Agricultural Trade Promotion," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 93(1), pages 194-208.
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    Keywords

    International Relations/Trade; Marketing;

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