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Working Paper No. 155

Published: 2014
Category:
Economics

An Exploratory Study of Climate Change Innovations in Wine Regions in Australia

Jeremy Galbreath
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Abstract
The implications of climate change for regional innovation remains understudied. Exploratory in nature, this study examines climate change innovations in two regional wine clusters in Australia. In South Australia, the evidence suggests firms in the wine industry are implementing climate change innovations at a higher rate than their counterparts in Western Australia, even though Western Australian firms appear to be experiencing more disruptive effects of climate change. To help explain these differences, key variables are examined. Knowledge exchanges (including types of knowledge) in the region and firm-level absorptive capacity explain the uptake of climate change innovations in South Australian firms, whereas knowledge exchanges alone (including types of knowledge) explain innovations in Western Australian firms. A discussion of the findings is offered along with future research opportunities for climate change research in regional studies.

Working Paper No. 154

Published: 2014
Category:
Business

Firm-level Predictors of Women in Top Business Roles: Insights from the Wine Industry

Jeremy Galbreath
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Abstract

Gender diversity in the workplace is considered both an economic and ethical imperative and as such has garnered substantial research attention. To advance the literature, this study analyzes firm-level predictors of women in top management roles across all wine producers in Australia between 2007 and 2013. In the main, firm size reduces the likelihood of women representation in top roles, as predicted. Firms with strong environmental sustainability credentials are more likely to have higher levels of women’s representation in top roles, including in CEO and marketer roles, supporting our hypothesis. However, contrary to the prediction, high export orientations within firms were found to negatively impact women’s representation in top roles; namely, women in the CEO and winemaker roles. The findings are discussed and future research directions put forth.

Working Paper No. 153

Published: 2014
Category:
Economics

In Vino Veritas? Social Influence on ‘Private’ Wine Evaluations at a Wine Social Networking Site

Omer Gokcekus, Miles Hewstone & Huseyin Cakal
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Abstract
An archival analysis of evaluations of wines provides a unique context in which to investigate social influence in a naturalistic setting. We conducted analyses
based on 6,157 notes about 106 wines posted by wine drinkers at a wine social networking site. Our findings suggest that social influence on private wine evaluations occurred by communicating a descriptive norm via written information. We provide empirical evidence that there is social influence on private wine evaluations that is greater than the effect of experts’ ratings and prices combined. This influence comes mainly from the first few group members, and increases as a function of source uniformity. Together with a lack of evidence that more credible or expert members have more influence, these findings suggest that influence in this setting is normative rather than informational. Results have implications for widespread effects of social influence on consumer and other websites where we are subject to the power of others’ opinions.

Working Paper No. 152

Published: 2014
Category:
Economics

Wine and Climate Change

Orley Ashenfelter & Karl Storchmann
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Abstract
In this article we provide an overview of the extensive literature on the impact of weather and climate on grapes and wine with the goal of describing how climate change is likely to affect their production. We start by discussing the physical impact of weather on vine phenology, berry composition and yields, and then survey the economic literature measuring the effects of temperature on wine quality, prices, costs and profits and how climate change will affect these. We also describe what has been learned so far about possible adaptation strategies for grape growers that would allow them to mitigate the economic effects of climate change. We conclude that climate change is likely to produce winners and losers, with the winners being those closer to the North and South Poles. There are also likely to be some substantial short run costs as growers adapt to climate change. Nevertheless, wine making has survived through thousands of years of recorded history, a history that includes large climate changes.

Working Paper No. 151

Published: 2014
Category:
Economics

Classification and Re-Classification: Oregon’s Willamette Valley AVA and its New Sub-AVAs

Omer Gokcekus & Clare M. Finnegan
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Abstract
The creation of new, sub-AVAs within Oregon’s Willamette Valley AVA may indicate a desire on the part of well-established wineries to “split” or separate their social grouping from those with lesser qualifications. Once their social cluster has been differentiated, we theorize that these wineries would be able to capitalize on their newly developed distinctiveness and collect a larger regional reputation premium. Based on 2,221 Wine Spectator rated pinot noir wines between 1984 and 2008, regression analyses demonstrate that indeed regional reputation premiums have significantly increased with the creation of sub-AVAs; and that the price-quality ratio gap between sub-AVAs and the rest of Willamette has widened.

Working Paper No. 150

Published: 2014
Category:
Economics

Women in top roles in the wine industry: Forging ahead or falling behind?

Jeremy Galbreath
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Abstract
This is the first known large-scale study in the literature to examine women in the wine industry. By investigating the top wine-producing states in Australia and using a unique database, women across CEO, winemaker, viticulturist, and marketing roles are tracked for the years 2007-2013, resulting in 16,763 firm year observations. By relying on social identity theory, a hypothesis is put forth that women’s representation in top roles is actually less than predicted. The hypothesis is confirmed. A hypothesis is also posited that women in South Australia have higher representation in top roles than women in any other wine-producing state. The hypothesis is partially supported. Finally, this study hypothesizes that were a wine firm has a woman CEO, the likelihood of women representation in the other roles studied increases, which finds support. The results are discussed, along with future research directions and limitations.

Working Paper No. 149

Published: 2014
Category:
Economics

Proximity and scientific collaboration: Evidence from the global wine industry

Lorenzo Cassi, Andrea Morrison & Roberta Rabellotti
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Abstract
International collaboration among researchers is a far from linear and straightforward process. Scientometric studies provide a good way of understanding why and how international research collaboration occurs and what are its costs and benefits. Our study investigates patterns of international scientific collaboration in a specific field: wine related research. We test a gravity model that accounts for geographical, cultural, commercial, technological, structural and institutional differences among a group of Old World (OW) and New World (NW) producers and consumers. Our findings confirm the problems imposed by geographical and technological distance on international research collaboration. Furthermore, they show that similarity in trade patterns has a positive impact on international scientific collaboration. We also find that international research collaboration is more likely among peers, in other words, among wine producing countries that belong to the same group, e.g. OW producers or newcomers to the wine industry.

Working Paper No. 148

Published: 2014
Category:
Business

Gradual Catch Up and Enduring Leadership in the Global Wine Industry

Andrea Morrison & Roberta Rabellotti
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Abstract
Recent studies about catching up are often focused on the emergence of high-tech sectors such as electronics, software, pharmaceutical and telecommunications. These industries are indeed globally known for having sparked economic growth in some selected countries, such as Japan and South Korea in the eighties and nineties, and India and China in more recent years. Nevertheless, there is little doubt that in a large number of emerging countries the agro-food industry still significantly contributes to GDP. Though often depicted as low value-added and with little innovation content, the agro-food industry is a sector with considerable opportunities for technological and rent upgrading. UNCTAD (2009) has identified a group of dynamic and competitive middle-income countries, including Argentina, Brazil, Chile Thailand and Malaysia, which have become exporters of high-quality processed primary products. Some authors have envisaged an undergoing process of de-commodification of primary commodities, which are increasingly transformed from standardized staples into high-quality, diversified, processed goods, with raising barriers of entry, high knowledge intensity and technological dynamism, increasing value added content and high export price per unit (Farinelli, 2012; Kaplinsky and Fitter, 2004; Kaplinsky, 2005; Perez et al, 2009).
Among the most dynamic primary industries there is wine, which is an extremely interesting case from a catch up point of view because the latecomers in the international market have changed how wine is produced, sold and consumed and in doing so they have challenged the position held by the incumbents (Giuliani et al, 2011). Until the end of the 1980s without a doubt, European countries, and particularly France and Italy, dominated the international market for wine. Subsequently, significant changes into the market, namely the decrease in consumption in traditional consuming countries, the entry of new inexperienced consumers and the increasing importance of large distribution have put under attack this supremacy. Initially the USA and Australia and later emerging countries such as Chile and South Africa have gained increasing market shares in terms of both exported volumes and values at the expense of the incumbents. More recently, due to the higher involvement of consumers and the increasing attention to variety and regional specificities in some market segments a new comer as Australia has slowed down its growth, opening up opportunities to newer entrants such as Argentina and New Zealand. At the same time, innovation has also interested the incumbents, in particularly Italy, which has challenged the leadership of France in some key markets such the USA (Mariani et al., 2012).
Finally, some further future changes can be envisaged in the new rapidly growing Asian markets, still representing a small share of the global demand but with a lot of potentialities of becoming a new key scene in the wine industry.
In this paper we aim at investigating the different catch up cycles occurring from the 1960s until 2010 in the global wine sector through a detailed analysis of exports in volume, value and unit price. This analysis allows addressing issues related with the increasing share in the global market of latecomer countries and the relative decline of the incumbents, as well as possible changes in the market leadership within these two groups.
In the next section after a brief account of the literature on catch up we focus on catch up in the wine industry since the 1960s. Then, in the Section 3 we present an analysis of the evolution of the industry investigated based on trade data. Section 4 provides a detailed analysis of the entry of the New World (NW) producers explaining how market changes opened up a window of opportunity and then followed transformations in the innovative and knowledge base and in the institutional settings. The following section focuses on the resurgence of Old Word (OW)1 countries in the international markets. In Section 6, we discuss about the rise of new actors among the latecomers. Section 7 puts forward the hypothesis of a new cycle following the emergence of Asia both as a rapidly growing market and as a new production source. Section 8 concludes.

Working Paper No. 147

Published: 2014
Category:
Business

The British Columbia Wine Industry: can it compete with the big guys?

Lee Cartier
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Abstract

In 1989, the Canada – United States Free Trade Agreement (FTA) was implemented and dramatically changed the course of the wine industry’s development in British Columbia (BC). The FTA forced the industry to make the transition from being highly protected, and inefficient, to a competitive market contender. Although considered initially to be a victim of the FTA, by 2010, the BC wine industry contributed $295.8 million to the BC economy, or 0.15% of provincial GDP, and provided 5,100 direct and indirect jobs; and is now considered by many to be a remarkable BC success story. This investigation traces the evolution of the industry from 2000 to 2010 by examining the structural changes that occurred in the industry’s value chain during that period.
The study employs and industry cluster model to identify the relationships between the firms located in the Okanagan region. Results from the study show the growth in value added from all sectors of the value chain and identify several sources of the industry’s competitive advantage: extensive vertical integration, and a strong relationship to the tourism cluster. Conclusions are provided regarding the future challenges and opportunities facing the industry.

Working Paper No. 146

Published: 2014
Category:
Economics

Binge Drinking, Alcohol Prices, and Alcohol Taxes: A Systematic Review of Results for Youth, Young Adults, and Adults from Economic Studies, Natural Experiments, and Field Studies

Jon P. Nelson
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Abstract
Heavy episodic (“binge”) drinking of alcohol has serious public health implications, especially for youth and young adults. However, previous reviews have failed to address in a comprehensive manner the effects of alcohol prices and taxes on binge drinking by gender and age group. Methods: A systematic review is performed for possible effects of alcohol prices and taxes on binge drinking for three age groups. Outcomes examined include binge participation, intensity and frequency. Fifty-six relevant economic studies were recovered, with results distributed equally among three age groups. Also recovered were five natural experiments for tax reductions and six field studies, which increased the country coverage. Criteria for inclusion/exclusion and potential sources of bias are discussed, including adequacy of price and tax data. Price-binge relationships are judged using a 95% confidence interval (p ≤ 0.05) for statistical significance. Results: More than half of economic studies report insignificant results for prices or taxes (30 null of 56 studies), with mixed results in 13 studies and significant results in only 13 studies. Null results are equally distributed across age groups, but some mixed results reflect different outcomes by gender. Prices or taxes are insignificant for 11 of 16 samples for men and 7 of 14 samples for women. Four of five natural experiments report null results for country-level tax cuts. Six field studies examine a variety of pricing methods and drink specials, but results are mixed. Conclusions: A large body of evidence now indicates that binge drinkers are not highly-responsive to increased prices or taxes, and may not respond at all. Non- responsiveness holds generally for younger and older drinkers and for male and female binge drinkers alike. Increased alcohol prices or taxes are unlikely to be effective as a means to reduce binge drinking, regardless of gender or age group.

Working Paper No. 145

Published: 2013
Category:
Business

Innovation and Learning Dynamics in the Chilean and Argentine Wine Industries

Fulvia Farinelli
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Abstract
This paper focuses on the magnitude, variety, and sources of innovation introduced by the Chilean and Argentine wine industries during the past two decades. It analyzes whether the prolonged export growth of Chilean and Argentine wines has been achieved by building the innovation capacity of local actors and creating domestic linkages with local grape producers, winemakers and input providers, or by relying exclusively upon FDI and knowledge flows generated abroad. In line with the evolutionary tradition, this study explores the hypothesis that, much as in the case of high-tech sectors, the ability of developing countries to enter knowledge-intensive natural resource-based sectors, such as wine, depends on their ability to access capital, technology and knowledge from abroad, that is, on what can be defined as “external” sources of innovation. It also depends, however, on the ability to absorb and adapt imported technology and know-how to the local environment, that is, on the creation of local tacit knowledge and endogenous R&D capabilities.
This paper measures, first of all, the innovativeness of the leading 25 Chilean and of the leading 25 Argentine exporters of bottled wines, and looks at the variety of innovations introduced, focusing not only on new methods of production, but also on the development of new products and new ways of organizing business. Subsequently, it identifies the role played by external sources of innovation such as FDI, as well as capital-embodied and codified knowledge flows in triggering the phenomenal technological upgrading process of the Chilean and Argentine wine industries. Finally, it looks at the role played by internal sources of innovation, namely at the creation of local tacit knowledge and incremental innovation, at the emergence of a wide pool of highly qualified human resources, and at the role of sectoral R&D programmes, local universities and research centres in the creation of endogenous technological capabilities.
This paper is structured as follows: Section 2 measures the innovativeness of the leading 25 Chilean and of the leading 25 Argentine exporters of bottled wines. Section 3 looks at the variety of innovations introduced, focusing – in line with the Schumpeterian tradition – not only on new methods of production, but also on the development of new products and new ways of organizing business. Section 4 looks at the triggering role of FDI in stimulating the phenomenal technological upgrading process of the Chilean and Argentine wine industries over the past two decades. Section 5 focuses on the importance of external sources of innovation in sustaining such a process, namely, on the importance of capital-embodied and codified knowledge flows channelled through imports of foreign machinery and quality certification mechanisms. Section 6 looks at the creation of local tacit knowledge and incremental innovation in the Chilean and Argentine wine industries, and at the emergence of a wide pool of highly qualified local oenologists, agronomists and viticulturalists. Section 7 analyses the role of sectoral R&D programmes and of local universities and research centers in the creation of endogenous technological capabilities. Section 8 concludes with some considerations on the longer-term sustainability of the export boom of Chilean and Argentine wines.

Working Paper No. 144

Published: 2013
Category:
Economics

An Analysis of Wine Consumption Trends and Food-Related Expenditures in Japan

Makiko Omura, Yuka Sakurai & Kensuke Ebihara
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Abstract
This paper attempts to understand the mechanism of an upward trend in wine consumption in Japan by analysing its trend and possible correlations with food-related consumptions. Through the panel and time-series analyses of wine consumption and food-item expenditures, and of wine consumption and food-service industry sales, we investigate whether wine consumption is correlated with food westernisation in Japan and whether wine is gaining its steady place in daily life of Japanese. Although not robust, we find supportive evidences for both, particularly for the second one. While on-premise consumption, in particular at reasonably priced diners, is estimated to be an important factor for growing wine consumption in Japan, there are possible evidences that home consumption of wine is increasing. It is also suggested that reasonably price wine, especially that of imported wine, are likely to be the key for future wine consumption in Japan.

Working Paper No. 143

Published: 2013
Category:
Economics

Turkey’s Arduous Journey from Vine to Wine: Why Can a Country, with the Fourth-Largest Vineyard in the World, not Make Wine from its Grapes?

Durmus Ozdemir
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Abstract
This paper examines the impact of the recent high taxation policy on Anatolian wine production as well as the value added loss from the use of grapes for non-wine consumption. The results clearly indicate that the high taxation policy is significantly reducing the wine production in Turkey. The suggested policy option of increasing the wine production may create six times more revenue than the existing policy outcome. A possible feasible policy is to remove the lump sum tax from exports and encourage export-oriented ‘Anatolian Old World’ wine.

Working Paper No. 142

Published: 2013
Category:
Economics

The Price of Wine

Elroy Dimson, Peter L. Rousseau & Christophe Spaenjers
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Abstract
We examine the impact of aging on wine prices and the Performance of wine as a long-term investment, using a unique historical database for five long-established Bordeaux wines that we construct from auction and dealer prices. We estimate the life-cycle price patterns with a regression model that avoids multicollinearity between age, vintage year, and time by replacing the vintage effects with annual data on production yields and weather quality. In line with the predictions of an illustrative model, we observe the highest rates of appreciation for young high-quality wines that are still maturing. The findings suggest that the non-financial "psychic return" to holding wines that are substantially beyond maturity is at least 1%. Using an arithmetic repeat-sales regression, we estimate an annualized return to wine Investments (net of insurance and storage costs) of 4.1%, in real GBP terms, between 1900 and 2012. Wine underperforms equities over this period, but outperforms government bonds, art, and stamps. Wine and equity returns are positively correlated.

Working Paper No. 141

Published: 2013
Category:
Economics

Importing Chardonnay. A South African Political Farce

Gavin Williams
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Abstract
In 1985, the Commission chaired by Judge Klopper reported on the illegal import into South Africa of chardonnay clones, which turned out not to be chardonnay but auxerrois, an inferior cultivar (variety). This paper examines the Evidence before and the Report of the Commission, and the political and institutional context in which it took place.

Working Paper No. 140

Published: 2013
Category:
Economics

The Caloric Costs of Culture: Evidence from Indian Migrants

David Atkin
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Abstract
Anthropologists have long documented substantial and persistent differences across so- cial groups in the preferences and taboos for particular foods. One natural question to ask is whether such food cultures matter in an economic sense. In particular, can culture constrain caloric intake and contribute to malnutrition? To answer this question, I first document that inter-state migrants within India consume fewer calories per Rupee of food expenditure com- pared to their non-migrant neighbors, even for households with very low caloric intake. I then form a chain of evidence in support of an explanation based on culture: that migrants make nutritionally-suboptimal food choices due to cultural preferences for the traditional foods of their origin states. First, I focus on the preferences themselves and document that migrants bring their origin-state food preferences with them when they migrate. Second, I link together the findings on caloric intake and preferences by showing that the gap in caloric intake between locals and migrants is related to the suitability and intensity of the migrants’ origin-state food preferences: the most adversely affected migrants (households in which both husband and wife migrated to a village where their origin-state preferences are unsuited to the local price vector) would consume 7 percent more calories if they possessed the same preferences as their neighbors.

Working Paper No. 139

Published: 2013
Category:
Economics

Do restaurants cater to locapours? Using Zagat Survey data to examine factors that influence wine list selections

Joseph M. Perla, Bradley J. Rickard & Todd M. Schmit
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Abstract
There has been an increase in interest in local foods among final consumers in the United States, and there has also been a rise in offerings of local products in restaurants. Here we use Zagat Survey data and restaurant-specific menu information to estimate factors that influence the availability of New York State (NYS) wine in 1,401 NYS restaurants. We focus on wine because the production region is clearly labeled on the menu and because there is a burgeoning wine industry in NYS. Our econometric results indicate that décor ratings, cuisine styles, certain wine list characteristics, and distance to wine regions have a statistically significant impact on the likelihood of NYS restaurants serving local wine.

Working Paper No. 138

Published: 2013
Category:
Economics

Food Prices and Body Fatness among Youths

Michael Grossman, Erdal Tekin & Roy Wada
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Abstract
In this paper, we examine the effect of food prices on clinical measures of obesity, including body mass index (BMI) and percentage body fat (PBF) measures derived from bioelectrical impedance analysis (BIA) and dual energy x-ray absorptiometry (DXA), among youths ages 12 through 18. The empirical analyses employ data from various waves of the National Health and Nutrition Examination Survey (NHANES) merged with several food prices measured by county and year. This is the first study to consider clinically measured levels of body composition rather than BMI to investigate the effects of food prices on obesity among youths. We also examine whether the effects of food prices on body composition differ by gender and race/ethnicity. Our findings suggest that increases in the real price of one calorie in food for home consumption and the real price of fast-food restaurant food lead to improvements in obesity outcomes among youths. We also find that an increase in the real price of fruits and vegetables has negative consequences for these outcomes. Finally, our results indicate that measures of PBF derived from BIA and DXA are no less sensitive and in some cases more sensitive to the prices just mentioned than BMI.

Working Paper No. 137

Published: 2013
Category:
Economics

Measuring consumer preferences using hybrid discrete choice models

David Palma, Juan de Dios Ortúzar, Gerard Casaubon, Luis I. Rizzi & Eduardo Agosin
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Abstract
Wine is a complex product. Preferences for it are not only highly heterogeneous throughout the population, but also amply susceptible to context. The objective of this study is to discover and measure these preferences, focusing on a set of non-sensory attributes of wine.
To identify the most relevant non-sensory attributes of wine, from the consumers’ standpoint we considered four sources: existing literature, a Delphi survey (applied to wine marketing experts), in- depth interviews and a web-page survey answered by fairly large sample of wine consumers. Not all sources were consistent on which attributes were the most important. Notably, consumers did not select price as a relevant attribute on the web survey, even though it had been considered relevant in the in-depth interviews. Finally, six wine attributes were selected for inclusion in a stated choice (SC) experiment: grape variety, alcohol level, label design, product recommendations, price and discounts.
An efficient experimental design was then developed and a web based SC survey was applied to 274 regular wine consumers (who had already answered the previous web survey). These consumers have high income (among the richest 20% of the Chilean population), only 28% of them are female and 33% are 35 years old or younger. The SC experiment simulated a purchase, at a retail store, for a casual meal with friends. A fixed fictional brand was used for all the wines presented on the experiment. With this data we estimated various discrete choice models, including mixed logit and hybrid choice models.
Grape variety was found to be the main driver of preferences. Evidence of preference for higher alcohol levels was also discovered. Price proved to be highly endogenous, as it is strongly related to wine’s expected quality. Recommendation by a friend and critics were equally valued, except in the case of (self-declared) expert consumers. Preferences over label designs showed high variability. The results also suggest that price is a key attribute in the construction of expected quality by the consumer before tasting the product.

Working Paper No. 136

Published: 2013
Category:
Business

Wine Market Regulation in Argentina: Past and Future Impacts

Alejandro Gennari, Jimena Estrella Orrego & Leonardo Santoni
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Abstract
The origins of the Argentinean wine industry can be traced to the Spanish colonial period and the establishment of the Virreinato del Rio de la Plata. However, the emergence of the modern wine industry is explained by the Italian and Spanish immigration of the late XIX century and by the contribution of European specialists hired by emergent Schools of Agriculture such as the Faculty of Agrarian Science from the National University of Cuyo, as it is known nowadays. The planting of French varieties (Cabernet Sauvignon, Merlot, Tannat and especially Malbec), Italian varieties (Barbera, Nebbiolo, Sangiovese, Bonarda) and Spanish ones (Tempranillo, Semillón, Pedro Giménez) took place simultaneously with the introduction of the railway in the provinces of Mendoza and San Juan thus favoring immigration and the diffusion of new growing and wine-making techniques. The irrigation system and water management organization also began at the time, giving a key contribution to the wine industry emergence. Big family wineries of Italian (Giol, Gargantini, Tittarelli, Cavagnaro, Filippini, Rutini, etc) and Spanish (Escorihuela, Arizu, Goyenechea, etc) origins were born, grew and consolidated in this period.
During the XX century the Argentinean wine industry experienced periods of expansion triggered by the credence on an unlimited domestic market and periods of intense crisis with disastrous consequences for wineries and grape growers. Public regulations were present in these fluctuations aiming at reducing the negative impacts of recession or aiming at profiting from the expansion period. Wineries, grape growers, governors and congress men gave shape with their actions to the wine industry with diverse impact in the economy of the main wine producing regions: Mendoza and San Juan. Implemented regulations include: temporary plantation prohibitions, tax-breaks programs for specific vine varieties, regulations for sales quantity, public acquisition of grapes and wine for ulterior elimination or distillation, among others. Most of these initiatives only had short term effects thus constantly required new measures. This extensive regulation constitutes a vast experience for all agri-food chains and for the whole Argentinean economy, as it illustrates the short-term and long-term advantages and disadvantages of different measures.

Working Paper No. 135

Published: 2013
Category:
Economics

Alcohol Consumption, Deterrence and Crime in New York City

Hope Corman & Naci H. Mocan
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Abstract
This paper investigates the relationship between alcohol consumption, deterrence, and crime for New York City. We examine high-frequency time-series data from 1983 to 2001 for one specific location to examine the impacts of variations in both alcohol consumption and deterrence on seven “index” crimes. We tackle the endogeneity of arrests and the police force by exploiting the temporal independence of crime and deterrence in these high-frequency data, and we address the endogeneity of alcohol by using instrumental variables where alcohol sales are instrumented with city and state alcohol taxes and minimum drinking age. We find that alcohol consumption is positively related to assault, rape, and larceny crimes but not murder, robbery, burglary, or motor vehicle theft. We find strong deterrence for all crimes except assault and rape. Generally, deterrence effects are stronger than alcohol effects.

Working Paper No. 134

Published: 2013
Category:
Economics

The Rise and Fall of the World’s Largest Wine Exporter (And Its Institutional Legacy)

Giulia Meloni & Johan Swinnen
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Abstract
It is hard to imagine in the 21st global wine economy, but until 50 years ago Algeria was the largest exporter of wine in the world – and by a wide margin. Between 1880 and 1930 Algerian wine production grew dramatically. Equally spectacular is the decline of Algerian wine production: today, Algeria produces and exports little wine. This paper analyzes the causes of the rise and the fall of the Algerian wine industry. There was an important bi-directional impact between developments of the Algerian wine sector and French regulations. French regulations had a major impact on the Algerian wine industry. Vice versa, the growth of the Algerian wine industry triggered the introduction of important wine regulations in France at the beginning of the 20th century and during the 1930s. Important elements of these regulations are still present in the European Wine Policy today.

Working Paper No. 133

Published: 2013
Category:
Economics

An agency-oriented model to explain vine-growing specialization in the province of Barcelona (Catalonia, Spain) in the mid-nineteenth century

Marc Badia-Miró & Enric Tello
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Abstract
We present a model of vine-growing specialization in the municipalities of the province of Barcelona in the mid-19th century that explains how a comparative advantage arose through a process deemed to be one of the starting points for Catalan industrialization. The results confirm the roles played by the ‘Boserupian’ population-push on land-use intensification and the ‘Smithian’ market-pull in a growing demand from the Atlantic economy. They also stress the conditioning function of agro-ecological endowments and socio-institutional settings related to income inequality. Vineyard planting gave rise to less unequal rural communities until 1820, but inequality grew again afterwards.

Working Paper No. 132

Published: 2013
Category:
Business

The Impact of General Public Wine Education Courses on Consumer Perception

Richard Sagala
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Abstract
Although it is very difficult to find any research that has been devoted to establish the value of wine education courses on consumers, gatekeepers are pinning a lot of hope on wine education to create or restore value. The purpose of this research was to investigate if wine courses lead to any changes in perception, consumption pattern and modify the consumer’s degree of involvement for the category.
We compared results of the same survey filled in twice by new wine course students in Montreal, Québec, Canada: prior to their first class and at the end of the course five weeks later; followed up by two questionnaires after three and twenty-four months. All survey questions were assessed in a five-point Likert type scale and the outcomes were statistically treated using t-student test.
The results obtained imply that the perceptions, behavior and commitment towards the category changes after having followed a wine course. An economic value was created for the proponent of the courses (the retailer) as the majority of students declared spending more afterwards. In addition, value was also created for the students as they declare an increase in involvement, a sense of empowerment, an increase in frequency of usage of the product but not in the intensity.

Working Paper No. 131

Published: 2013
Category:
Economics

Measuring Market Power in the Japanese Beer Industry

Craig R. Parsons & Xavier de Vanssay
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Abstract
We investigate various characteristics, including firm-level panel data, of the Japanese beer market over time (over 30 years) to determine the level and nature of competition. Next, we conduct two sets of regressions using market share and firm-level accounting data in a variation of Boone’s (2008) measure of competition. While traditional indicators (very high market concentration, little or no overt price competition) suggest that Japanese beer firms do not compete, Boone-style regressions yield strong evidence of competitive behavior.

Working Paper No. 130

Published: 2013
Category:
Economics

The Economics of Planting Rights in Wine Production

Koen Deconinck & Johan Swinnen
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Abstract
Almost half of the world’s vineyards are in the EU and the EU produces around 60% of the world’s wine. The EU is also the world’s most regulated wine market. In 2007, the European Union decided on a major reform of its wine policy, the so-called Common Market Organization (CMO) for wine. A crucial element was the abolishment of a system of planting rights to regulate planting of vineyards in the EU. However, before its implementation opponents of the liberalization of planting rights are lobbying EU governments to reverse the decision. Our paper provides the first theoretical analysis of the economic effects and the welfare implications of planting rights. Our model integrates the markets for land, planting rights and wine to analyze the efficiency and distributional effects. We analyze the impact of enforcement problems, trade restrictions, and the use of government reserves in the planting rights system.

Working Paper No. 129

Published: 2013
Category:
Economics

Expert opinions and Bordeaux wine prices An Attempt to Correct the Bias of Subjective Judgments

Jean-Marie Cardebat & Jean-Marc Figuet
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Abstract
Since wine is an experience good, experts may help to fill a lack of information to non-expert consumers. In the literature, the true impact of experts on the pricing of wine is unclear. Do they really influence the price? Is there a Parker effect? Or are meteorological conditions predominant? We use a dataset concerning the scores attributed to wines from France, Spain and United States by 19 experts over the period 2000-2010 and the corresponding meteorological conditions. The data aims to avoid endogeneity and bias rooted in errors of judgment. We show that Bordeaux wine prices are very sensitive to expert ratings, but this impact is not higher than it is for Californian wines or Spanish wines. Furthermore, we did not find any direct evidence of a Parker effect for Bordeaux wine, but a presumption of measurement errors of any individual expert.

Working Paper No. 128

Published: 2012
Category:
Economics

Organizational Structure and Operation of the Illinois Wine Industry

Jason R.V. Franken & Kevin Bacon
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Abstract
This study examines vertical coordination in an emerging Illinois wine industry. Results generally corroborate earlier findings that quality matters, as temporal issues related to grape perishability increase the probability written contracts are used to procure grapes and decrease reliance on informal agreements. Hold-up concerns related to sourcing adequate quality grapes and at risk investments winemaking equipment displace informal contracts with in-house production. Older wineries also rely more on their own vineyards, and larger ones require additional outside supplies. There is also some evidence that a few wineries outsource wine production activities to more experienced and larger wineries.

Working Paper No. 127

Published: 2012
Category:
Economics

A Note on Social Drinking: In Vino Veritas

Justus Haucap & Annika Herr
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Abstract
It has been a persistent phenomenon in many societies that a large proportion of alcohol consumption takes place in company of other people. While the phenomenon of social or public drinking is well discussed in disciplines as social psychology and anthropology, econo- mists have paid little attention to the social environment of alcohol consumption. This paper tries to close this gap and explains social drinking as a trust facilitating device. Since alcohol consumption tends to make some people (unwillingly) tell the truth, social drinking can eventually serve as a signaling device in social contact games.

Working Paper No. 126

Published: 2012
Category:
Economics

Sustainability of Top Ranked Restaurants in France: Methodological Note and Analysis of Gault-Millau Data from 1974 to 2010

J. François Outreville
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Abstract
Do well-known restaurants stand the test of time? The objective of this short paper is to review the list of the top ranked restaurants from 1974 to 2010 and examine the sustainability of the grades of these restaurants over time. A new methodology to calculate migration and default rates is presented for selected years over the period under study. It is shown that these rates are relatively stable and low compared to bankruptcy rates. After 24 years, the default rate of top ranked restaurant is only about 32%.
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Submission

Please send your papers as PDF files to the editor, Victor Ginsburgh, at vginsbur@ulb.ac.be
Papers will be quickly reviewed, prior to potential posting on the website. Decision will be to post or not, possibly with short comments, but without referee reports. The decision will be based primarily on the suitability of the paper’s topic to the aims of the Association.
Such decisions are independent of publication decisions for the Journal of Wine Economics.

Working Paper publication requires that at least one author
is a regular member of AAWE.

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