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Working Papers
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Vertical differentiation, Perceptions Restructuring, and Wine choices: the case of the Gran Selezione in Chianti Wines.

Working Paper No. 211

Published: 2017
Category:
Economics

Vertical differentiation, Perceptions Restructuring, and Wine choices: the case of the Gran Selezione in Chianti Wines.

Marco Costanigro, Gabriele Scozzafava & Leonardo Casini
Full Text PDF
Abstract

We conduct a choice experiment where the number of labels vertically differentiating Chianti wines (Chianti, Chianti Classico, Chianti Classico Riserva, Chianti Classico Gran Selezione) is augmented incrementally in a between-subject design, eliciting both quality perceptions and wine choices. We find that quality expectations are endogenous to the labeling regime, and adding a high-quality label (e.g., Chianti Gran Selezione) decreases the perceived quality of all other Chianti wines (comparative stigma). A model conditioning on subjective quality perceptions with heterogeneous WTP for quality is then proposed, and estimated via random parameter multinomial logit. The endogeneity problem arising from using subjective beliefs as regressors is addressed by means of a control-function approach. Results are compared to reduced form approaches where the marginal utility of quality and subjective perceptions are confounded in a single label-specific estimate, and the model is used to determine how much of the cannibalization observed after introducing higher-tier quality standards is attributable to restructuring of perceptions and comparative stigma.

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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