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Home
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Working Papers
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Location illusion in the wine market: The eroding effect of word-of-mouth on the regional reputation premium

Working Paper No. 102

Published: 2012
Category:
Economics

Location illusion in the wine market: The eroding effect of word-of-mouth on the regional reputation premium

Omer Gokcekus & Dennis Nottebaum
Full Text PDF
Abstract
We develop a model to examine (1) the relationship between initial wine prices, regional reputation and bottle quality, as well as (2) the potential impact of a word-of-mouth effect, particularly via online social wine networks on price discounts. Regression estimation results based on this model provide empirical evidence to support the existence of a premium attached to bottle quality and regional reputation in setting initial prices. Moreover, we find a significant positive effect of regional reputation on discount rates, which indicates the existence of a word-of-mouth effect and its eroding effect on the regional reputation premium.

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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