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Estimating the Supply Elasticity of California Wine Grapes Using Regional Systems of Equations

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  • Volpe, Richard
  • Green, Richard
  • Heien, Dale
  • Howitt, Richard

Abstract

This article is the first of its kind to estimate econometrically the supply elasticity of California wine grapes. Wine grapes constitute the single largest crop in the state of California in terms of total receipts. Allowing for the dynamic adjustments of quasi-fixed inputs, we estimate simultaneous systems of equations for California's four major wine grape growing regions and eight of the most widely grown varieties. We find that California wine grape production is, on the whole, inelastic with respect to prices received. The variety showing the most price responsiveness is Chardonnay. There appears to be no significant difference in price responsiveness between the coastal and inland growing regions, or between red and white grape varieties. (JEL Classification: Qll, Q13, R14)

Suggested Citation

  • Volpe, Richard & Green, Richard & Heien, Dale & Howitt, Richard, 2010. "Estimating the Supply Elasticity of California Wine Grapes Using Regional Systems of Equations," Journal of Wine Economics, Cambridge University Press, vol. 5(2), pages 219-235, April.
    • Handle: RePEc:cup:jwecon:v:5:y:2010:i:02:p:219-235_00
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    Cited by:

    1. José M. Rodríguez-Flores & Jorge A. Valero Fandiño & Spencer A. Cole & Keyvan Malek & Tina Karimi & Harrison B. Zeff & Patrick M. Reed & Alvar Escriva-Bou & Josué Medellín-Azuara, 2022. "Global Sensitivity Analysis of a Coupled Hydro-Economic Model and Groundwater Restriction Assessment," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 36(15), pages 6115-6130, December.
    2. Rickard, Bradley J. & Gergaud, Olivier & Ho, Shuay-Tsyr & Hu, Wenjing, 2014. "Trade Liberalization In The Presence Of Domestic Regulations: Impacts Of The Proposed Eu-U.S. Free Trade Agreement On Wine Markets," Working Papers 190670, American Association of Wine Economists.
    3. Alston, Julian M. & Fuller, Kate B. & Kaplan, Jonathan D. & Tumber, Kabir P., 2013. "Economic Consequences of Pierce’s Disease and Related Policy in the California Winegrape Industry," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 38(2), pages 1-29, August.
    4. Sambucci, Olena & Alston, Julian M., 2017. "Estimating the Value of California Wine Grapes," Journal of Wine Economics, Cambridge University Press, vol. 12(2), pages 149-160, May.
    5. Nahanga Verter & Lea Hasíková, 2019. "The Performance of Grape Production in the Czech Republic," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 67(1), pages 333-342.

    More about this item

    JEL classification:

    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns

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