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Heterogeneous buyer preferences behind rejecting the law of one price in the fine wines market

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  • Faye, Benoit
  • Le Fur, Eric

Abstract

Developing a second hedonic step, we show that the heterogeneity of agents' preferences partly explains the rejection of the law of one price in the Bordeaux and Burgundy fine wines. A significant effect of buyer profiles appears on the price.

Suggested Citation

  • Faye, Benoit & Le Fur, Eric, 2024. "Heterogeneous buyer preferences behind rejecting the law of one price in the fine wines market," Economics Letters, Elsevier, vol. 239(C).
    • Handle: RePEc:eee:ecolet:v:239:y:2024:i:c:s0165176524002271
    DOI: 10.1016/j.econlet.2024.111744
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    References listed on IDEAS

    as
    1. Benoit Faye, 2021. "Methodological discussion of Airbnb's hedonic study: A review of the problems and some proposals tested on Bordeaux City data," Post-Print hal-03407540, HAL.
    2. Jean-Marie Cardebat & Benoit Faye & Eric Le Fur & Karl Storchmann, 2017. "The Law of One Price? Price Dispersion on the Auction Market for Fine Wine," Post-Print hal-03897972, HAL.
    3. B. Faye & E. Le Fur & S. Prat, 2015. "Dynamics of fine wine and asset prices: evidence from short- and long-run co-movements," Applied Economics, Taylor & Francis Journals, vol. 47(29), pages 3059-3077, June.
    4. Epple, Dennis, 1987. "Hedonic Prices and Implicit Markets: Estimating Demand and Supply Functions for Differentiated Products," Journal of Political Economy, University of Chicago Press, vol. 95(1), pages 59-80, February.
    5. Cardebat, Jean-Marie & Faye, Benoît & Le Fur, Eric & Storchmann, Karl, 2017. "The Law of One Price? Price Dispersion on the Auction Market for Fine Wine," Journal of Wine Economics, Cambridge University Press, vol. 12(3), pages 302-331, August.
    6. Faye, Benoît & Le Fur, Eric, 2019. "On the Constancy of Hedonic Wine Price Coefficients over Time," Journal of Wine Economics, Cambridge University Press, vol. 14(2), pages 182-207, May.
    7. Stephen Bazen & Jean-Marie Cardebat & Magalie Dubois, 2024. "The role of customer and expert ratings in a hedonic analysis of French red wine prices: from gurus to geeks?," Applied Economics, Taylor & Francis Journals, vol. 56(46), pages 5513-5529, October.
    8. David A. Jaeger & Karl Storchmann, 2011. "Wine Retail Price Dispersion in the United States: Searching for Expensive Wines?," American Economic Review, American Economic Association, vol. 101(3), pages 136-141, May.
    9. Bartik, Timothy J, 1987. "The Estimation of Demand Parameters in Hedonic Price Models," Journal of Political Economy, University of Chicago Press, vol. 95(1), pages 81-88, February.
    10. Brown, James N & Rosen, Harvey S, 1982. "On the Estimation of Structural Hedonic Price Models," Econometrica, Econometric Society, vol. 50(3), pages 765-768, May.
    11. Edward Oczkowski & Hristos Doucouliagos, 2015. "Wine Prices and Quality Ratings: A Meta-regression Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(1), pages 103-121.
    12. Eric Le Fur, 2021. "Collectors’ motives in the context of wealth management," Journal of Asset Management, Palgrave Macmillan, vol. 22(5), pages 326-337, September.
    13. Masset, Philippe & Weisskopf, Jean-Philippe & Faye, Benoît & Le Fur, Eric, 2016. "Red obsession: The ascent of fine wine in China," Emerging Markets Review, Elsevier, vol. 29(C), pages 200-225.
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    More about this item

    Keywords

    Fine wine; Hedonic method; Heterogeneous agent; Price;
    All these keywords.

    JEL classification:

    • Q19 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Other
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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