Why Do Distilleries Produce Multiple Ages of Whisky?

Ian B. Page

No 150430, 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. from Agricultural and Applied Economics Association

Abstract: Unlike many other vintage goods, distilleries often opt to mature their stocks to different ages, selling a heterogeneous line of products which vary in quality. We develop a theoretical model to examine the maturation decisions of a whisky distillery and find that it is possible for a profit-maximizing distillery to produce multiple ages of whisky under perfect competition. Based on an analysis of retail whisky prices, we find evidence suggesting that most distilleries that produce multiple ages of whisky do not operate under perfect competition. However, a hedonic estimation of whisky prices does not find any strong link between a distillery’s size and its ability to influence market prices, suggesting that distilleries may achieve market power through brand recognition.

Keywords: Demand and Price Analysis; Production Economics (search for similar items in EconPapers)
Pages: 29
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea13:150430

DOI: 10.22004/ag.econ.150430

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