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Advertising, Collective Action, And Labeling In The European Wine Markets

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  • Marette, Stephan
  • Zago, Angelo M.

Abstract

In this paper we consider the role for collective action in advertising investments needed to compete on foreign markets and/or to enter into new markets. We model the choices facing producers in regions where both AO (high quality) and table (low quality) wines are produced. By joining forces with producers of other regions to invest in advertising, producers may penetrate into new markets. We show that it is profitable to enter into the new markets when, other things being equal, the size of the new market is relatively big, when the traditional market is relatively small, and when the size of the fixed investment in advertising is relatively small. We discuss the policy implications of the results, examining possible modifications of the AO system to facilitate collective action and improve investment levels.

Suggested Citation

  • Marette, Stephan & Zago, Angelo M., 2003. "Advertising, Collective Action, And Labeling In The European Wine Markets," Journal of Food Distribution Research, Food Distribution Research Society, vol. 34(3), pages 1-10, November.
    • Handle: RePEc:ags:jlofdr:27049
    DOI: 10.22004/ag.econ.27049
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    References listed on IDEAS

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    1. Luis M.B. Cabral, 2000. "Stretching Firm and Brand Reputation," RAND Journal of Economics, The RAND Corporation, vol. 31(4), pages 658-673, Winter.
    2. Kym Anderson, 2001. "Australia’sWine Industry - Recent growth and prospects," Cahiers d'Economie et Sociologie Rurales, INRA Department of Economics, vol. 60, pages 111-147.
    3. Sullivan, Mary, 1990. "Measuring Image Spillovers in Umbrella-Branded Products," The Journal of Business, University of Chicago Press, vol. 63(3), pages 309-329, July.
    4. James L. Seale & Mary A. Marchant & Alberto Basso, 2003. "Imports versus Domestic Production: A Demand System Analysis of the U.S. Red Wine Market," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 25(1), pages 187-202.
    5. Glyn Wittwer & Nick Berger & Kym Anderson, 2019. "A Model of the World’s Wine Markets," World Scientific Book Chapters, in: Kym Anderson (ed.), The International Economics of Wine, chapter 1, pages 3-26, World Scientific Publishing Co. Pte. Ltd..
    6. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
    7. Nelson, Phillip, 1970. "Information and Consumer Behavior," Journal of Political Economy, University of Chicago Press, vol. 78(2), pages 311-329, March-Apr.
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    Cited by:

    1. Stephan Marette & Roxanne Clemens & Bruce Babcock, 2008. "Recent international and regulatory decisions about geographical indications," Agribusiness, John Wiley & Sons, Ltd., vol. 24(4), pages 453-472.
    2. Chengyan Yue & Stéphan Marette & John C. Beghin, 2006. "How to Promote Quality Perception in Wine Markets: Brand Advertising or Geographical Indication?," Food and Agricultural Policy Research Institute (FAPRI) Publications (archive only) 06-wp426, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    3. Henneberry, Shida Rastegari & Armbruster, Walter J., 2003. "Emerging Roles For Food Labels: Inform, Protect, Persuade," Journal of Food Distribution Research, Food Distribution Research Society, vol. 34(3), pages 1-8, November.

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