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The Price Premium for Organic Wines: Estimating a Hedonic Farm-gate Price Equation

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  • Corsi, Alessandro

    () (Università di Torino, Department of Economics)

  • Strøm, Steinar

    () (Dept. of Economics, University of Oslo)

Abstract

Organic wines are increasingly produced and appreciated. Since organic production is more costly, a crucial question is whether they benefit from a price premium. We estimate hedonic price functions for Piedmont organic and conventional wines. We use data on the production side in addition to variables of interest for consumers. Our results show that, along with characteristics of interest to consumers, some farm and producer characteristics not directly relevant for consumers do significantly affect wine prices. We find that organic wine tends to obtain higher prices than conventional wine. The price premium is not simply an addition to other price components, but organic quality modifies the impact of the other variables on price.

Suggested Citation

  • Corsi, Alessandro & Strøm, Steinar, 2013. "The Price Premium for Organic Wines: Estimating a Hedonic Farm-gate Price Equation," Memorandum 07/2013, Oslo University, Department of Economics.
  • Handle: RePEc:hhs:osloec:2013_007
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    Citations

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    Cited by:

    1. Delmas, Magali A. & Gergaud, Olivier & Lim, Jinghui, 2016. "Does Organic Wine Taste Better? An Analysis of Experts' Ratings," Journal of Wine Economics, Cambridge University Press, vol. 11(03), pages 329-354, December.
    2. repec:oup:erevae:v:44:y:2017:i:4:p:658-682. is not listed on IDEAS
    3. Vincent Hoang & Takao Iida & Shigeru Matsumoto & Natsuki Watanabe & Clevo Wilson, "undated". "Market penetration of imported agricultural products: A hedonic analysis of the Japanese table wine market," Working Papers e83, Tokyo Center for Economic Research.
    4. Vincent Hoang & Takao Iida & Shigeru Matsumoto & Natsuki Watanabe & Clevo Wilson, 2016. "Consumer’s comparison between local and imported organic products: a hedonic analysis of the Japanese table wine market," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 6(3), pages 405-415, December.
    5. Eugenio Brentari & Rosella Levaggi & Paola Zuccolotto, 2015. "A hedonic price analysis for the Italian wine in the domestic market," Quality & Quantity: International Journal of Methodology, Springer, pages 999-1012.
    6. García Arancibia, Rodrigo & Rossini, Gustavo & Depetris Guiguet, Edith, 2015. "Wine Label Descriptors and Shelf Price Paid by Argentine Consumers," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 16(2), June.

    More about this item

    Keywords

    Organic wines; Hedonic price functions; Farming; Prices; Price variables;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • D49 - Microeconomics - - Market Structure, Pricing, and Design - - - Other
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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