At what price should Bordeaux wines be released?

Philippe Masset and Jean‐Philippe Weisskopf

Economic Inquiry, 2022, vol. 60, issue 1, 392-412

Abstract: This paper models optimal release prices of an experience good recurrently issued on markets. Using a sample of Bordeaux wines, we find that using a minimal number of intrinsic and extrinsic attributes is sufficient to explain a large proportion of release prices. We further observe a significant relationship between primary market prices and secondary market prices and general economic conditions. Release prices can deviate from secondary market prices in the short run but remain aligned over the long run. Finally, an out‐of‐sample analysis indicates that short‐run mispricing directly affects the purchase behavior of customers.

Date: 2022
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