IDEAS home Printed from https://ideas.repec.org/a/aea/aecrev/v101y2011i3p136-41.html
   My bibliography  Save this article

Wine Retail Price Dispersion in the United States: Searching for Expensive Wines?

Author

Listed:
  • David A. Jaeger
  • Karl Storchmann

Abstract

Similar to other markets in which deviations from Jevons' "law of one price" is the norm rather than the exception, the retail wine market in the United States is characterized by large price dispersions. Drawing on a large sample of retail prices from wine-searcher.com we find an average per-wine coefficient of variation of 23 percent. Some of this is due to differential market conditions, especially state regulations. Our evidence suggests that dispersion also depends positively on price levels, after controlling for consumer, market, and state heterogeneity.

Suggested Citation

  • David A. Jaeger & Karl Storchmann, 2011. "Wine Retail Price Dispersion in the United States: Searching for Expensive Wines?," American Economic Review, American Economic Association, vol. 101(3), pages 136-141, May.
    • Handle: RePEc:aea:aecrev:v:101:y:2011:i:3:p:136-41
    as

    Download full text from publisher

    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.136
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Carlson, John A & McAfee, R Preston, 1983. "Discrete Equilibrium Price Dispersion," Journal of Political Economy, University of Chicago Press, vol. 91(3), pages 480-493, June.
    2. Kathy Baylis & Jeffrey Perloff, 2002. "Price Dispersion on the Internet: Good Firms and Bad Firms," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 21(3), pages 305-324, November.
    3. J. Yannis Bakos, 1997. "Reducing Buyer Search Costs: Implications for Electronic Marketplaces," Management Science, INFORMS, vol. 43(12), pages 1676-1692, December.
    4. Dahlby, Bev & West, Douglas S, 1986. "Price Dispersion in an Automobile Insurance Market," Journal of Political Economy, University of Chicago Press, vol. 94(2), pages 418-438, April.
    5. Eric K. Clemons & Il-Horn Hann & Lorin M. Hitt, 2002. "Price Dispersion and Differentiation in Online Travel: An Empirical Investigation," Management Science, INFORMS, vol. 48(4), pages 534-549, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pedro Bordalo & Nicola Gennaioli & Andrei Shleifer, 2013. "Salience and Consumer Choice," Journal of Political Economy, University of Chicago Press, vol. 121(5), pages 803-843.
    2. de Meza, David & Pathania, Vikram, 2021. "Is the Second-Cheapest Wine a Rip-Off? Economics vs. Psychology in Product-Line Pricing," Working Papers 321852, American Association of Wine Economists.
    3. Nicola Gennaioli & Alberto Martin & Stefano Rossi, 2014. "Sovereign Default, Domestic Banks, and Financial Institutions," Journal of Finance, American Finance Association, vol. 69(2), pages 819-866, April.
    4. Saffer, Henry & Gehrsitz, Markus, 2016. "The effect of post-and-hold laws on alcohol consumption," International Review of Law and Economics, Elsevier, vol. 45(C), pages 63-71.
    5. François-Charles Wolff, 2016. "Bargaining powers of buyers and sellers on the online diamond market: a double perspective non-parametric analysis," Annals of Operations Research, Springer, vol. 244(2), pages 697-718, September.
    6. Anania, Giovanni & Nisticò, Rosanna, 2014. "Price dispersion and seller heterogeneity in retail food markets," Food Policy, Elsevier, vol. 44(C), pages 190-201.
    7. Antonis Michis & Anna Markidou, 2013. "Determinants of retail wine prices: evidence from Cyprus," Empirical Economics, Springer, vol. 45(1), pages 267-280, August.
    8. Faye, Benoit & Le Fur, Eric, 2024. "Heterogeneous buyer preferences behind rejecting the law of one price in the fine wines market," Economics Letters, Elsevier, vol. 239(C).
    9. de Meza, David & Pathania, Vikram, 2021. "Is the second-cheapest wine a rip-off?," Economics Letters, Elsevier, vol. 205(C).
    10. repec:ags:ijag24:347275 is not listed on IDEAS
    11. Fran 篩s-Charles Wolff, 2015. "Does price dispersion increase with quality? Evidence from the online diamond market," Applied Economics, Taylor & Francis Journals, vol. 47(55), pages 5996-6009, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:smu:ecowpa:1301 is not listed on IDEAS
    2. Ya-Ling Chiu & Jiangze Du & Jying-Nan Wang, 2022. "The Effects of Price Dispersion on Sales in the Automobile Industry: A Dynamic Panel Analysis," SAGE Open, , vol. 12(3), pages 21582440221, August.
    3. Böheim, René & Hackl, Franz & Hölzl-Leitner, Michael, 2021. "The impact of price adjustment costs on price dispersion in e-commerce," International Journal of Industrial Organization, Elsevier, vol. 77(C).
    4. Stephen McDonald & Colin Wren, 2017. "Consumer Search Ability, Price Dispersion and the Digital Divide," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 79(2), pages 234-250, April.
    5. Anania, Giovanni & Nisticò, Rosanna, 2014. "Price dispersion and seller heterogeneity in retail food markets," Food Policy, Elsevier, vol. 44(C), pages 190-201.
    6. Anania, Giovanni & Nistico, Rosanna, 2012. "Price dispersion, search costs and consumers and sellers heterogeneity in retail food markets," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 125594, International Association of Agricultural Economists.
    7. Zhenlin Yang & Lydia Gan & Fang-Fang Tang, 2007. "A Study of Pricing Evolution in the Online Toy Market," Economic Growth Centre Working Paper Series 0704, Nanyang Technological University, School of Social Sciences, Economic Growth Centre.
    8. Jeffrey R. Brown & Austan Goolsbee, 2000. "Does the Internet Make Markets More Competitive?," NBER Working Papers 7996, National Bureau of Economic Research, Inc.
    9. Giovanni Anania & Rosanna Nisticò, 2011. "Price Dispersion, Search Costs And Consumers And Sellers Heterogeneity In Retail Food Markets," Working Papers 201105, Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF.
    10. Ma, Wenliang & Wang, Qiang & Yang, Hangjun & Zhang, Guoquan & Zhang, Yahua, 2020. "Understanding airline price dispersion in the presence of high-speed rail," Transport Policy, Elsevier, vol. 95(C), pages 93-102.
    11. Ramnath K. Chellappa & Raymond G. Sin & S. Siddarth, 2011. "Price Formats as a Source of Price Dispersion: A Study of Online and Offline Prices in the Domestic U.S. Airline Markets," Information Systems Research, INFORMS, vol. 22(1), pages 83-98, March.
    12. Ibrahim Mohammed & Basak Denizci Guillet & Rob Law, 2019. "Modeling dynamic price dispersion of hotel rooms in a spatially agglomerated tourism city for weekend and midweek stays," Tourism Economics, , vol. 25(8), pages 1245-1264, December.
    13. Anindya Ghose & Yuliang Yao, 2011. "Using Transaction Prices to Re-Examine Price Dispersion in Electronic Markets," Information Systems Research, INFORMS, vol. 22(2), pages 269-288, June.
    14. Michael R. Baye & John Morgan & Patrick Scholten, 2006. "Information, Search, and Price Dispersion," Working Papers 2006-11, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    15. Edgardo Arturo Ayala Gaytán, 2009. "Social network externalities and price dispersion in online markets," Ensayos Revista de Economia, Universidad Autonoma de Nuevo Leon, Facultad de Economia, vol. 0(2), pages 1-28, November.
    16. repec:bla:germec:v:1:y:2000:i:2:p:221-240 is not listed on IDEAS
    17. Sengupta Anirban & Wiggins Steven N., 2012. "Comparing Price Dispersion on and off the Internet Using Airline Transaction Data," Review of Network Economics, De Gruyter, vol. 11(1), pages 1-38, March.
    18. Ting Li & Robert J. Kauffman & Eric van Heck & Peter Vervest & Benedict G. C. Dellaert, 2014. "Consumer Informedness and Firm Information Strategy," Information Systems Research, INFORMS, vol. 25(2), pages 345-363, June.
    19. Radkevitch, U.L. & van Heck, H.W.G.M. & Koppius, O.R., 2008. "Coping with Costly Bid Evaluation in Online Reverse Auctions for IT Services," ERIM Report Series Research in Management ERS-2008-039-LIS, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    20. Joshua Sherman & Avi Weiss, 2017. "On Fruitful And Futile Tests Of The Relationship Between Search And Price Dispersion," Economic Inquiry, Western Economic Association International, vol. 55(4), pages 1898-1918, October.
    21. Randy A. Nelson & Richard Cohen & Frederik Roy Rasmussen, 2007. "An Analysis of Pricing Strategy and Price Dispersion on the Internet," Eastern Economic Journal, Eastern Economic Association, vol. 33(1), pages 95-110, Winter.
    22. Fedoseeva, Svetlana & Grein, Theresa & Herrmann, Roland, 2017. "How German Online Retailers Price Foods: An Empirical Analysis for Chocolate Products," International Journal on Food System Dynamics, International Center for Management, Communication, and Research, vol. 8(1), pages 1-13, January.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aecrev:v:101:y:2011:i:3:p:136-41. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.