Measuring Price Interactions: An Analysis of Substitution Patterns among Seven Bordeaux Wines
Livat, Florine
Measuring Price Interactions: An Analysis of Substitution Patterns among Seven Bordeaux Wines - 2008.
80
Do the registered designations of origin (Appellations d'Origine Contrôlée: AOCs) in the Bordeaux winegrowing districts function as independent markets? On what basis do consumers substitute Bordeaux wines with one another? We address these questions by studying the cointegration relationships that drive a price vector for seven Bordeaux AOCs. Empirical analysis shows that consumers do not switch between Bordeaux wines on the basis of objective criteria. On the contrary, they substitute wines on the basis of their perceived quality. Some of the substitutes display intrinsically divergent characteristics. The Bordeaux wine market is thus segmented by reputation.
Measuring Price Interactions: An Analysis of Substitution Patterns among Seven Bordeaux Wines - 2008.
80
Do the registered designations of origin (Appellations d'Origine Contrôlée: AOCs) in the Bordeaux winegrowing districts function as independent markets? On what basis do consumers substitute Bordeaux wines with one another? We address these questions by studying the cointegration relationships that drive a price vector for seven Bordeaux AOCs. Empirical analysis shows that consumers do not switch between Bordeaux wines on the basis of objective criteria. On the contrary, they substitute wines on the basis of their perceived quality. Some of the substitutes display intrinsically divergent characteristics. The Bordeaux wine market is thus segmented by reputation.
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