Imports versus Domestic Production: A Demand System Analysis of the U.S. Red Wine Market

James Seale () and Mary Merchant

No 15637, Technical Papers from University of Florida, International Agricultural Trade and Policy Center

Abstract: This research estimates price and expenditure elasticities of U.S. red wine imports from five countries--Italy, France, Spain, Australia, and Chile--which are compared to elasticities of domestically produced red wine using the first-difference version of the almost ideal demand system (AIDS). Expenditure elasticity results indicate that if U.S. total expenditures on red wine increase, domestic producers would gain most. Empirical results for conditional own-price elasticities of demand indicate that U.S. and Chilean red wines are elastic while U.S. demand for red wines from other countries are highly inelastic. Due to the magnitude of consumption of U.S. domestic red wines relative to imports, an increase in the price of U.S. wine results in a decline in quantity demanded that is six times larger than that for French and Italian red wines and over 20 times larger than that of other import countries. Results suggest that U.S. red-wine producers could increase their total revenue by decreasing prices, while Italian and French producers can increase total revenues by increasing prices.

Keywords: Demand and Price Analysis; International Relations/Trade (search for similar items in EconPapers)
Pages: 28
Date: 2002
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Citations: View citations in EconPapers (11)

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Related works:
Journal Article: Imports versus Domestic Production: A Demand System Analysis of the U.S. Red Wine Market (2003)
Journal Article: Imports versus Domestic Production: A Demand System Analysis of the U.S. Red Wine Market (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uflotp:15637

DOI: 10.22004/ag.econ.15637

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