Geographical Indications and Welfare: Evidence from the US Wine Market

Raj Chandra, Giancarlo Moschini, Gabriel E. Lade and GianCarlo Moschini
Authors registered in the RePEc Author Service: GianCarlo Moschini

ISU General Staff Papers from Iowa State University, Department of Economics

Abstract: A systematic component of wine quality is believed to depend on the geo-climatic factors of its production conditions. This belief has long been a motivation for the development of geographical indications for wines. In the United States, American Viticulture Areas (AVAs) represent the most common geographic factor firms use to differentiate their products. In this paper, we estimate a discrete choice model of US wine demand to study the market and welfare impact of AVAs. Specifically, we develop a two-level nested logit choice model, featuring many wine products and characteristics--including wine type, brands, and varietals, in addition to AVAs--and estimate it using Nielsen Consumer Panel data over the 2007-2019 period. We find significant welfare gains from AVA information on wine labels. Over the period of interest, the welfare gain attributable to AVAs is estimated at about $2.37 billion, with wine producers and retailers capturing approximately 80% of this surplus. Approximately 90% of consumer welfare gains are due to product differentiation and increased variety, with the remaining gains due to price decreases resulting from increased product competition.

Date: 2022-02-22
New Economics Papers: this item is included in nep-agr, nep-com and nep-cul
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://dr.lib.iastate.edu/server/api/core/bitstre ... c342db2553da/content
Our link check indicates that this URL is bad, the error code is: 403 Forbidden

Related works:
Working Paper: Geographical Indications and Welfare: Evidence from the US Wine Market (2021)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:isu:genstf:202202221402290000

Access Statistics for this paper

More papers in ISU General Staff Papers from Iowa State University, Department of Economics Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070. Contact information at EDIRC.
Bibliographic data for series maintained by Curtis Balmer ().