Individual and Collective Repuatation Indicators of Wine Quality
CIES Working Paper No. 10
22 Pages Posted: 3 Aug 2000
Date Written: March 2000
A model of hedonic pricing is estimated using U.S. data for premium wines from North America (Napa Valley, Sonoma Valley/County, Oregon, Washington State), Australia, South Africa and Chile. Implicit prices for quality attributes including variety, sensory quality ratings, as well as individual and collective reputation indicators are identified. We focus on the value of wine quality to consumers and how quality indicators influence the willingness to pay for premium wine. A information model, where consumers are assumed to fully rely on sensory quality ratings is compared to a reputation model where collective indicators for wine growing areas and individual indicators for specific wine attributes provide additional information about quality to the consumer. Highly significant estimators for sensory wine quality as well as individual and collective reputation indicators explain price differences of premium wines.
Keywords: Wine Quality, Reputation, Information, Hedonic Pricing
JEL Classification: Q12
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