Valuing Vineyards: A Directional Distance Function Approach

Robin Cross, Rolf Färe, Shawna Grosskopf and William L. Weber

Journal of Wine Economics, 2013, vol. 8, issue 1, 69-82

Abstract: We exploit the duality between the cost function and the directional distance function in value space to recover hedonic prices of product or asset characteristics. An application is offered for 96 Oregon vineyards located in the Willamette Valley of Oregon that sold between 1995 and 2007. Specifically, we recover hedonic prices for the number of high-, medium-, and low-quality vineyard acres and the number of nonvineyard acres sold in the parcel. Not surprisingly, higher-quality vineyard acres have a higher estimated hedonic price than medium- or low-quality acres, but as the number of high-quality acres increases, the hedonic price falls. (JEL Classification: D24, C61, Q10)

Date: 2013
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