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Economic Geography Of The U.S. Wine Industry

Author

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  • Canning, Patrick N.
  • Perez, Agnes C.

Abstract

This study examines wine trade in the United States to assess the impact of higher energy costs on the average distance of world and U.S. regional wine shipments, or wine miles, to U.S. markets. To examine this issue we calibrate a spatial equilibrium model of the U.S. wine industry. The model accounts for (i) consumer preferences for variety, (ii) monopolistic-competition/increasing-returns in the production of differentiated wine products, and (iii) transportation costs. Wine production areas are grouped into nine U.S. and seven world producing regions. U.S. markets are grouped into the 50 States plus the District of Columbia. Results indicate that U.S. consumers are willing to pay substantial transportation costs in order to consume a wide variety of wines from premier U.S. and world wine growing regions. As increasing energy costs drive up the price of freight services, wine mile impacts are limited by the degree of regional product differentiation in U.S. and world producing regions.

Suggested Citation

  • Canning, Patrick N. & Perez, Agnes C., 2008. "Economic Geography Of The U.S. Wine Industry," Working Papers 43891, American Association of Wine Economists.
    • Handle: RePEc:ags:aawewp:43891
    DOI: 10.22004/ag.econ.43891
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    References listed on IDEAS

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    Cited by:

    1. Lucia Baldi & Massimo Peri & Daniela Vandone, 2013. "Investing in the wine market: a country-level threshold cointegration approach," Quantitative Finance, Taylor & Francis Journals, vol. 13(4), pages 493-503, March.
    2. Roberta Sardone & Valentina Cardinale & Crescenzo Dell’aquila & Paola Doria & Roberto Solazzo & Alfredo Manuel Coelho & Etienne Montaigne & Vasco Boatto & Andrea Dal Bianco & Luigi Galletto & Luca Ros, 2012. "The liberalisation of planting rights in the EU wine sector," Working Papers hal-01499067, HAL.
    3. Woods, Timothy A. & Deng, Xueting & Nogueira, Lia & Yang, Shang-Ho, 2015. "Local Wine Expenditure Determinants in the Northern Appalachian States," Journal of Food Distribution Research, Food Distribution Research Society, vol. 46(2), pages 1-21, July.

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    Keywords

    Demand and Price Analysis; Environmental Economics and Policy; Resource/Energy Economics and Policy;
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