INTERNATIONAL WINE TRADE: ANALYZING THE VALUE OF REPUTATION AND QUALITY SIGNALS

Guenter Schamel

No 22157, 2003 Annual meeting, July 27-30, Montreal, Canada from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: This research examines the factors behind price differentials based on regional origin. For this purpose, we estimate a hedonic pricing model of premium wines sold in the U.S. We hypothesize that numerous quality signals affect wine prices including expert opinions about sensory quality, maturing potential, and special selections as well as derived indicators that signal a high or low quality producer. After correcting for variety, regional origin, and age, the data confirms that a wine's price is related to producer quality signals, which may even negate regional effects. We conclude that it is problematic to interpret regional premiums as brand value (as opposed to quality premiums) without adjusting them for producer quality signals. Estimated brand values may then be biased. Moreover, a strong positive producer quality signal receives a larger percentage price premium than a comparable negative signal which warrants important marketing implications for producers and entire regions.

Keywords: International; Relations/Trade (search for similar items in EconPapers)
Pages: 16
Date: 2003
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea03:22157

DOI: 10.22004/ag.econ.22157

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