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Quality classifications in competition: Price formation in the German wine market

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  • Rössel, Jörg
  • Beckert, Jens

Abstract

How do judgment devices influence price formation? We investigate this question through a study of the German wine market. The German wine market is characterized by the simultaneous existence of two classification systems: the official classification system referring to the quality in the glass, and the concept of terroir, introduced by a private association of quality winemakers, the Verband deutscher Prädikatsweingüter. We used a data set comprising 1,890 wines from 248 different wineries in the German wine-growing regions of Rheingau and Rheinhessen. Our results show that the two classification systems function as mutually exclusive strategic options for winemakers. We also show that the non-official classification of terroir is much more powerful in explaining price formation within the market.

Suggested Citation

  • Rössel, Jörg & Beckert, Jens, 2012. "Quality classifications in competition: Price formation in the German wine market," MPIfG Discussion Paper 12/3, Max Planck Institute for the Study of Societies.
    • Handle: RePEc:zbw:mpifgd:123
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    1. Beckert, Jens & Rössel, Jörg & Schenk, Patrick, 2014. "Wine as a cultural product: Symbolic capital and price formation in the wine field," MPIfG Discussion Paper 14/2, Max Planck Institute for the Study of Societies.
    2. Brunke, Henrich & Lapsley, James T. & Mueller, Rolf A.E. & Tauscher, Ludwig, 2016. ""Tested Quality In The Glass": Wine Quality Certification In Germany," Working Papers 234641, American Association of Wine Economists.
    3. Carter, Elizabeth, 2015. "Constructing quality: Producer power, market organization, and the politics of high value-added markets," MPIfG Discussion Paper 15/9, Max Planck Institute for the Study of Societies.

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