nep-cul New Economics Papers
on Cultural Economics
Issue of 2008‒11‒18
five papers chosen by
Roberto Zanola
University of the Piemonte Orientale

  2. Country of Origin Advertising and U.S. Wine Imports By Thompson, Stanley R.; Sam, Abdoul G.
  4. Estimating the Effect of the Order of Information Revelation on Purchases: Expectations and Subjective Experience in the Wine Market By Gustafson, Christopher
  5. Estimating the Demand for Wine Using Instrumental Variable Techniques By Cuellar, Steven; Huffman, Ryan

  1. By: Cuellar, Steven; Karnowsky, Dan; Acosta, Frederick
    Abstract: This paper examines the effect of the movie Sideways on US wine consumption. Specifically, we examine the effects of the movie on the consumption of Merlot, which is derided in the movie and the effect on Pinot Noir, which is praised. We examine the trends in consumption before and after the movie and perform statistical tests for structural changes in consumption. We also estimate demand functions for both Merlot and Pinot Noir and test for differences in their demands before and after the movie. Finally, we test for changes in consumption of each varietal by price point.
    Keywords: Sideways, Chow Test, Demand Estimation, Demand and Price Analysis,
    Date: 2008–10
  2. By: Thompson, Stanley R.; Sam, Abdoul G.
    Abstract: The objective of this paper is to investigate the impact of media advertising on the US consumption of imported wine. A panel data of seven countries and twelve years from 1994-2005 is used to estimate the demand function for US wine imports. Our empirical analysis reveals evidence of strong price and advertising effects of domestic and imported wines on imported quantities; the advertising of imported wines significantly increases the quantity of imports while the advertising of domestic wines has a strong depressing effect on imported wine volumes. Our short-run import demand price and advertising elasticity estimates are -0.406 and 0.109 for imports and 0.654 and -0.370 for domestic wines, respectively. Other determinants such as population, real income and country specific fixed effects are also found significant. Based on our model estimates, we compute the marginal return to advertising to be $2.68 on average for the six importing countries and $3.40 for the U.S.
    Keywords: International Relations/Trade, Marketing,
    Date: 2008
  3. By: Delmas, Magali A.; Grant, Laura E.
    Abstract: Eco-labeling signals that a product has been eco-certified. While there is increasing use of eco-labeling practices, there is still little understanding of the conditions under which eco-labels can command price premiums. In this paper, we argue that the certification of environmental practices by a third party should be analyzed as a strategy distinct from although related to the advertisement of the eco-certification through a label posted on the product. By assessing eco-labeling and eco-certification strategies separately, we are able to identify benefits associated with the certification process independently from those associated with the actual label. More specifically, we argue in the context of the wine industry that eco-certification can provide benefits, such as improved reputation in the industry or increased product quality, which can lead to a price premium without the need to use the eco-label. We estimate this price premium of wine due to the eco-certification of grapes using 13,400 observations of wine price, quality rating, varietals, vintage, and number of bottles produced, for the period 1998-2005. Overall, certifying wine increases the price by 13%, yet including an eco-label reduces the price by 20%. This result confirms the negative connotation associated by consumers with organic wine. The price premium of this luxury good due to certification acts independently from its label, a confounding result not previously demonstrated by related literature.
    Keywords: organic wine, wine market, price premium, eco-wine, Demand and Price Analysis, Environmental Economics and Policy,
    Date: 2008–03
  4. By: Gustafson, Christopher
    Abstract: Recent research on consumer behavior has indicated that, contrary to most models in economics, information can affect consumers' subjective experience with a good. When consumers receive information about the quality of a good before experiencing the sensory characteristics of the good, the consumers' stated preferences for the goods have been affected. However, a study has yet to examine whether this affects consumers' purchasing decisions, or is limited to stated preference. This field experiment looks at the release of appellation information prior to and after tasting of wine, and uses sales of the two wines tasted as a dependent variable.
    Keywords: Food Consumption/Nutrition/Food Safety, Marketing,
    Date: 2008
  5. By: Cuellar, Steven; Huffman, Ryan
    Abstract: The demand for wine is generally estimated on an aggregate level as a single commodity. However, as recent history shows us, the demand for wine not only varies considerably by varietal, but also by price point within each varietal. As a result, although estimates of the demand for wine may be beneficial to the wine industry as a whole, they provide little benefit to individual wine producers. This paper seeks to overcome the limitations of prior research on the demand for wine by providing estimates for the demand for wine by varietal and price point. We also provide estimates of own price effects, income effects as well as cross price effects by color, varietal and price point. Problems of endogeneity inherent in demand estimation are corrected by utilizing a novel instrumental variable technique using grape prices as the instrument.
    Keywords: Pooled Cross Section Time Series Data, Instrumental Variable Regression, Wine Demand, Demand and Price Analysis, Research Methods/ Statistical Methods,
    Date: 2008–10

This nep-cul issue is ©2008 by Roberto Zanola. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.