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Impacts of Differences between Secondary Market and Release Prices for Cult and Non-Cult Wines

Author

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  • McCluskey, Jill J.
  • Mittelhammer, Ron C.
  • Okhunjanov, Botir

Abstract

For U.S. cult wines, Okhunjanov, McCluskey, and Mittelhammer (2025) provide evidence that secondary market prices are higher than corresponding release prices. They also present a theory in which a firm may choose to price its product below the market equilibrium level in order to create a perception of scarcity, which increases demand in subsequent periods. In this paper, we extend this work by examining whether the price gap, i.e., the difference between the secondary-market price and release price, impacts subsequent secondary-market prices differently across cult and non-cult wines. For cult wines, as reported in the previous study, the lagged price gap has a positive and statistically significant relationship with the average secondary-market price for all model specifications. However, we find that non-cult wines, on average, do not underprice. Moreover, in contrast to cult wines, there is no statistically significant relationship between the lagged price gap and the average secondary market price across all model specifications for non-cult wines.

Suggested Citation

  • McCluskey, Jill J. & Mittelhammer, Ron C. & Okhunjanov, Botir, 2025. "Impacts of Differences between Secondary Market and Release Prices for Cult and Non-Cult Wines," 2025 AAEA & WAEA Joint Annual Meeting, July 27-29, 2025, Denver, CO 361161, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea25:361161
    DOI: 10.22004/ag.econ.361161
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    References listed on IDEAS

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    1. Masset, Philippe & Weiskopf, Jean-Philippe & Cardebat, Jean-Marie, 2023. "Efficient pricing of Bordeaux en primeur wines," Journal of Wine Economics, Cambridge University Press, vol. 18(1), pages 39-65, February.
    2. Jacobo Núñez & David Martín‐Barroso & Francisco J. Velázquez, 2024. "The hedonic price model for the wine market: A systematic and comparative review of the literature," Agricultural Economics, International Association of Agricultural Economists, vol. 55(2), pages 247-264, March.
    3. Marco Costanigro & Jill J. McCluskey & Ron C. Mittelhammer, 2007. "Segmenting the Wine Market Based on Price: Hedonic Regression when Different Prices mean Different Products," Journal of Agricultural Economics, Wiley Blackwell, vol. 58(3), pages 454-466, September.
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