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Globalization, Superstars, and the Importance of Reputation: Theory & Evidence from the Wine Industry

Author

Listed:
  • Gibbs, Michael

    (University of Chicago GSB)

  • Tapia, Mikel

    (Universidad Carlos III de Madrid)

  • Warzynski, Frederic

    () (Department of Economics, Aarhus School of Business)

Abstract

We develop a simple model of the effects of reputation on wine prices. An increasing fraction of consumers who are “naïve” (less well informed about wine quality) results in a stronger sensitivity of wine prices to ratings of quality. We then use data on prices and Robert Parker’s ratings of wines, to show that prices have become more related to Parker ratings over time. In addition, we find that a change in Parker rating has a stronger effect on price, the stronger is the wine’s reputation.

Suggested Citation

  • Gibbs, Michael & Tapia, Mikel & Warzynski, Frederic, 2009. "Globalization, Superstars, and the Importance of Reputation: Theory & Evidence from the Wine Industry," Working Papers 09-3, University of Aarhus, Aarhus School of Business, Department of Economics.
  • Handle: RePEc:hhs:aareco:2009_003
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    File URL: http://www.hha.dk/nat/wper/09-3_fwa.pdf
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    Cited by:

    1. Saens, Rodrigo & Berríos, Rodrigo, 2012. "The country brand trap," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    2. Corsi, Alessandro & Strøm, Steinar, 2013. "The Price Premium for Organic Wines: Estimating a Hedonic Farm-Gate Price Equation," Journal of Wine Economics, Cambridge University Press, vol. 8(01), pages 29-48, May.

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    JEL classification:

    • A10 - General Economics and Teaching - - General Economics - - - General

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