Red wines of Médoc: What is wine testing worth ?

Victor Ginsburgh and M. Monzak
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M. Monzak: Université Libre de Bruxelles

No 1992027, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: Winemaking is a highly complex technology. It needs inputs over which there is no control (good weather conditions), initial endowments which can hardly be modified (soil, exposure of the slopes), inputs which take 20 to 30 years before producing good quality outputs (vines), manual operations (picking), mechanical operations (rushing, racking) and chemical processes (during fermentation). In the paper, we disentangle the production technology, and try to quantify the impact on prices (qualities) of each of the many inputs (including weather conditions) and steps used in producing wine in Médoc. We show that technology and weather conditions are able to explain two thirds of the variance of prices; when reputation effects (based on the wine classification made in 1855) are included, this proportion rises to almost 85%. This suggests either that "classified" producers are able to charge higher prices, or that the classification is a measure of quality reflected by prices. We also show that two of the more recent attempts at classifying wines are not as good in explaining prices than the official (and old) 1855 grading.

JEL-codes: G20 G35 (search for similar items in EconPapers)
Date: 1992-04-01
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Red Wines of Médoc: What is Wine Tasting Worth?* (2013)
Working Paper: Red wines of Medoc: What is wine tasting worth? (2013)
Working Paper: Red Wines of Medoc. What is Wine Tasting Worth? (1992)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:1992027

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