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Market Power and Price Competition in the Italian Wine Market

Antonio Stasi (), Antonio Seccia () and Gianluca Nardone
Additional contact information
Gianluca Nardone: University of Foggia

No 20-2010, Working Papers from Enometrica - Review of the Vineyard Data Quantification Society (VDQS) and the European Association of Wine Economists (EuAWE) - Macerata University, Faculty of Communications

Abstract:

The analysis explores the Italian wine sector and provides information on the industry structure and its conduct in terms of market power and price competition. In order to depict pricing behavior and market power measures, the Bertrand-Nash equilibrium is estimated through brand-level demand relative to the first 9 wine brands in terms of market share. The method used consists of a censored QUAIDS, chosen for its exibility. The results consist of demand price responsiveness and product sostituibility measures. Estimates allow the calculation of Lerner Indexes for each brand as well as mark-ups, the ability of a firm to push its prices above marginal costs. With those measures, policy and industry implications are drawn in terms of targeted actions in order to increase consumers' welfare and brand
loyalty indicators.

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L'analyse explore le secteur du vin italien et fournit des informations sur la structure de l'industrie et son comportement en termes de forces du marché et de concurrence des prix. Dans le but de décrire le comportement des prix et de mesurer les forces du marché, l'équilibre Bertrand-Nash est estimé à travers le niveau de demande des neuf premières marques de vin en parts de marché. La méthode utilisée est une QUAIDS censurée, retenue pour sa exibilité. Les résultats mesurent la réactivité de la demande aux prix et au possible remplacement d'un produit par un autre. Les estimations permettent de calculer les Index Lerner pour chaque marque, ainsi que les capacités de majorations, conçues comme la possibilité pour une entreprise de pousser son prix au-dessus des côuts marginaux. On peut ainsi mesurer les implications pour les politiques et pour l'industrie, en termes d'actions ciblées destinées Ã  accroître le bien-être des consommateurs et les indices de délité à la marque.

Keywords: Prices; QUAIDS; Italy; wine market (search for similar items in EconPapers)
JEL-codes: L66 L11 C34 (search for similar items in EconPapers)
Date: 2010-07, Revised 2010-09
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Published in Review Enometrica, Volume 3 - Special Issue 2010

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Persistent link: http://EconPapers.repec.org/RePEc:mcr:jenome:wpaper00020

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