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Natural Endowments, Production Technologies and the Quality of Wines in Bordeaux. Does Terroir Matter?

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  • Olivier Gergaud
  • Victor Ginsburgh

Abstract

We study whether quality assessments made by wine experts and by consumers (based on prices obtained at auction between 1980 and 1992) can be explained by variables describing endowments (land characteristics, exposures of vineyards) and technologies (from grape varieties and picking, to bottled wines). However, since technological choices are likely to depend on endowments, the effects can only be identified using an instrumental variables approach. We show that technological choices affect quality much more than natural endowments, the effect of which is negligible. Copyright © The Author(s). Journal compilation © Royal Economic Society 2008.

Suggested Citation

  • Olivier Gergaud & Victor Ginsburgh, 2008. "Natural Endowments, Production Technologies and the Quality of Wines in Bordeaux. Does Terroir Matter?," Economic Journal, Royal Economic Society, vol. 118(529), pages 142-157, June.
    • Handle: RePEc:ecj:econjl:v:118:y:2008:i:529:p:f142-f157
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    References listed on IDEAS

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    1. Joshua D. Angrist & Alan B. Krueger, 2001. "Instrumental Variables and the Search for Identification: From Supply and Demand to Natural Experiments," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 69-85, Fall.
    2. Victor Ginsburgh & Albert Di Vittorio, 1996. "Des enchères comme révélateurs de classement des vins," ULB Institutional Repository 2013/152439, ULB -- Universite Libre de Bruxelles.
    3. repec:fth:prinin:455 is not listed on IDEAS
    4. Lecocq, Sébastien & Visser, Michael, 2006. "Spatial Variations in Weather Conditions and Wine Prices in Bordeaux," Journal of Wine Economics, Cambridge University Press, vol. 1(2), pages 114-124, October.
    5. Di Vittorio, A. & Ginsburgh, V., 1996. "Des enchères comme révélateurs du classement des vins. Les Grands Crus du Haut-Médoc," LIDAM Reprints CORE 1223, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    6. Joshua Angrist & Alan Krueger, 2001. "Instrumental Variables and the Search for Identification: From Supply and Demand to Natural Experiments," Working Papers 834, Princeton University, Department of Economics, Industrial Relations Section..
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    More about this item

    JEL classification:

    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • Q16 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services

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