Impacts of Differences between Secondary Market and Release Prices for Cult and Non-Cult Wines

Jill J. McCluskey, Ron C. Mittelhammer and Botir Okhunjanov

No 361161, 2025 AAEA & WAEA Joint Annual Meeting, July 27-29, 2025, Denver, CO from Agricultural and Applied Economics Association

Abstract: For U.S. cult wines, Okhunjanov, McCluskey, and Mittelhammer (2025) provide evidence that secondary market prices are higher than corresponding release prices. They also present a theory in which a firm may choose to price its product below the market equilibrium level in order to create a perception of scarcity, which increases demand in subsequent periods. In this paper, we extend this work by examining whether the price gap, i.e., the difference between the secondary-market price and release price, impacts subsequent secondary-market prices differently across cult and non-cult wines. For cult wines, as reported in the previous study, the lagged price gap has a positive and statistically significant relationship with the average secondary-market price for all model specifications. However, we find that non-cult wines, on average, do not underprice. Moreover, in contrast to cult wines, there is no statistically significant relationship between the lagged price gap and the average secondary market price across all model specifications for non-cult wines.

Keywords: Agricultural; and; Food; Policy (search for similar items in EconPapers)
Pages: 15
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea25:361161

DOI: 10.22004/ag.econ.361161

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