IDEAS home Printed from https://ideas.repec.org/a/bla/jageco/v58y2007i3p454-466.html
   My bibliography  Save this article

Segmenting the Wine Market Based on Price: Hedonic Regression when Different Prices mean Different Products

Author

Listed:
  • Marco Costanigro
  • Jill J. McCluskey
  • Ron C. Mittelhammer

Abstract

Many economists have estimated hedonic price functions for red and white wine. However, estimating a single hedonic price function imposes the assumption that the implicit prices of the attributes are the same for any red or white wine. We argue that even within these two categories, wines are differentiated, and disregarding this heterogeneity causes an aggregation bias in the estimated implicit prices. By estimating hedonic functions specific to price ranges, we show that the wine market is segmented into several product classes or market segments. We find that a model accounting for the existence of wine classes has greater ability to explain the variability in the data and produces more accurate and interpretable results regarding the implicit prices of the attributes.

Suggested Citation

  • Marco Costanigro & Jill J. McCluskey & Ron C. Mittelhammer, 2007. "Segmenting the Wine Market Based on Price: Hedonic Regression when Different Prices mean Different Products," Journal of Agricultural Economics, Wiley Blackwell, vol. 58(3), pages 454-466, September.
  • Handle: RePEc:bla:jageco:v:58:y:2007:i:3:p:454-466
    DOI: 10.1111/j.1477-9552.2007.00118.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1477-9552.2007.00118.x
    Download Restriction: no

    File URL: https://libkey.io/10.1111/j.1477-9552.2007.00118.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Jack Triplett, 2004. "Handbook on Hedonic Indexes and Quality Adjustments in Price Indexes: Special Application to Information Technology Products," OECD Science, Technology and Industry Working Papers 2004/9, OECD Publishing.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rachel Griffith & Lars Nesheim, 2008. "Household willingness to pay for organic products," CeMMAP working papers CWP18/08, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    2. David Colman, 2010. "Agriculture's terms of trade: issues and implications," Agricultural Economics, International Association of Agricultural Economists, vol. 41(s1), pages 1-15, November.
    3. Joaquín Alegre & Magdalena Cladera & Maria Sard, 2012. "The Evolution of British Package Holiday Prices in the Balearic Islands, 2000–2008," Tourism Economics, , vol. 18(1), pages 59-75, February.
    4. DUo Qin & Yimeng Liu, 2013. "Modelling Scale Effect in Crosssection Data:The Case of Hedonic Price Regression," Working Papers 184, Department of Economics, SOAS University of London, UK.
    5. Ballestar, María Teresa & Díaz-Chao, Ángel & Sainz, Jorge & Torrent-Sellens, Joan, 2021. "Impact of robotics on manufacturing: A longitudinal machine learning perspective," Technological Forecasting and Social Change, Elsevier, vol. 162(C).
    6. David, Geraldine, 2016. "Art as an investment in a historical perspective," Other publications TiSEM 2361da4b-d827-4cae-91ce-1, Tilburg University, School of Economics and Management.
    7. Brachinger, Hans Wolfgang & Beer, Michael, 2009. "The Econometric Foundations of Hedonic Elementary Price Indices," DQE Working Papers 12, Department of Quantitative Economics, University of Freiburg/Fribourg Switzerland.
    8. Rachel Griffith & Martin O'Connell & Kate Smith, 2016. "Shopping Around: How Households Adjusted Food Spending Over the Great Recession," Economica, London School of Economics and Political Science, vol. 83(330), pages 247-280, April.
    9. Richard Carew & Wojciech J. Florkowski, 2010. "The Importance of Geographic Wine Appellations: Hedonic Pricing of Burgundy Wines in the British Columbia Wine Market," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 58(1), pages 93-108, March.
    10. Biljana Davidovska Stojanova & Branimir Jovanovic & Maja Kadievska Vojnovic & Gani Ramadani & Magdalena Petrovska, 2008. "Real Estate Prices In The Republic Of Macedonia," Working Papers 2008-03, National Bank of the Republic of North Macedonia.
    11. Haan Jan de, 2010. "Hedonic Price Indexes: A Comparison of Imputation, Time Dummy and ’Re-Pricing’ Methods," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 230(6), pages 772-791, December.
    12. Clements, Kenneth W. & Gao, Grace, 2012. "Quality, quantity, spending and prices," European Economic Review, Elsevier, vol. 56(7), pages 1376-1391.
    13. Fogarty, James Joseph & Sadler, Rohan, 2012. "To Save or Savour: A Review of Wine Investment," Working Papers 139663, University of Western Australia, School of Agricultural and Resource Economics.
    14. Empen, Janine, 2011. "Preissetzung Auf Dem Deutschen Joghurtmarkt: Eine Hedonische Analyse," 51st Annual Conference, Halle, Germany, September 28-30, 2011 115362, German Association of Agricultural Economists (GEWISOLA).
    15. Belma Öztürkkal & Aslı Togan-Eğrican, 2020. "Art investment: hedging or safe haven through financial crises," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 44(3), pages 481-529, September.
    16. Diewert, Erwin, 2007. "The Ottawa Group after Ten Meetings: Future Priorities," Economics working papers diewert-07-11-16-12-30-23, Vancouver School of Economics, revised 16 Nov 2007.
    17. Dogaru, Vasile, 2007. "Trade Costs Algorithm in Manoilescu Generalised Scheme," MPRA Paper 6919, University Library of Munich, Germany.
    18. Hans Wolfgang Brachinger & Michael Beer & Olivier Schöni, 2018. "A formal framework for hedonic elementary price indices," AStA Advances in Statistical Analysis, Springer;German Statistical Society, vol. 102(1), pages 67-93, January.
    19. repec:grz:wpaper:2014-05 is not listed on IDEAS
    20. Lars Nesheim, 2006. "Hedonic price functions," CeMMAP working papers CWP18/06, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    21. James J. Fogarty & Callum Jones, 2011. "Return To Wine: A Comparison Of The Hedonic, Repeat Sales And Hybrid Approaches," Australian Economic Papers, Wiley Blackwell, vol. 50(4), pages 147-156, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jageco:v:58:y:2007:i:3:p:454-466. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0021-857X .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.