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On Pricing Unconventional Prepaid Forward Contracts: Evidence from en primeur Fine Wine

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  • Czupryna, Marcin
  • Jakubczyk, Michał
  • Oleksy, Paweł

Abstract

An en primeur agreement is an unconventional forward contract. In this article, we provide a new conceptual framework for analyzing the properties of en primeur prices based on the cost of carry approach. The results, based upon Bayesian modeling, indicate that the cost of carry increases up to 0.9598 when en primeur and bottled wines are traded in parallel. Moreover, our findings confirm that price dispersion around the mean value is greater for en primeur wines (22.42%) than for standard bottled wines (8.2%) traded after the sale of en primeur wines has ended. (JEL Classifications: G12, G15, L66, Q02)

Suggested Citation

  • Czupryna, Marcin & Jakubczyk, Michał & Oleksy, Paweł, 2019. "On Pricing Unconventional Prepaid Forward Contracts: Evidence from en primeur Fine Wine," Journal of Wine Economics, Cambridge University Press, vol. 14(4), pages 400-408, November.
    • Handle: RePEc:cup:jwecon:v:14:y:2019:i:4:p:400-408_7
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    More about this item

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • Q02 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Commodity Market

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