IDEAS home Printed from https://ideas.repec.org/p/ags/eaa110/49842.html
   My bibliography  Save this paper

The Financial Value of Champagne Houses in a Cobweb Economy

Author

Listed:
  • Declerck, Francis
  • Cloutier, L. Martin

Abstract

The objective of the paper is to simulate the corporate value of Champagne makers by taking into account the Champagne market evolution. These measurements are conducted by linking financial debt, performance and valuation to a vertical coordination model of production-consumption within a cobweb economy. The overall model uses the dynamic structure that underlies the strategic interactions amongst grape producers and wine makers. These segments coordinate grape production and trade by forming expectations about final consumption, price and stock risks. The paper examines the dynamics of the financial cash flows and net worth of Champagne houses for the 1977 – 2003 period using system dynamics (SD) modeling principles. The results presented in this paper report on key financial indicators for that period for financial debt, performance and valuation of Champagne makers. It provides a sound basis to pursue this work, because the model can further enhanced to anticipate the possible value Champagne makers for the coming crucial years since the Champagne appellation has reached its geographical limit determined by the protected designation of origin (PDO), while worldwide demand continues to grow.

Suggested Citation

  • Declerck, Francis & Cloutier, L. Martin, 2008. "The Financial Value of Champagne Houses in a Cobweb Economy," 110th Seminar, February 18-22, 2008, Innsbruck-Igls, Austria 49842, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaa110:49842
    DOI: 10.22004/ag.econ.49842
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/49842/files/Declerck-Cloutier.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.49842?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. Francis Declerck, 2005. "Managing price cycles in the Champagne industry," Agribusiness, John Wiley & Sons, Ltd., vol. 21(4), pages 531-544.
    2. Marc Nerlove, 1958. "Adaptive Expectations and Cobweb Phenomena," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 72(2), pages 227-240.
    3. Oliver E. Williamson, 1991. "Strategizing, economizing, and economic organization," Strategic Management Journal, Wiley Blackwell, vol. 12(S2), pages 75-94, December.
    4. Klein, Benjamin & Crawford, Robert G & Alchian, Armen A, 1978. "Vertical Integration, Appropriable Rents, and the Competitive Contracting Process," Journal of Law and Economics, University of Chicago Press, vol. 21(2), pages 297-326, October.
    5. Colucci, D. & Valori, V., 2006. "Ways of learning in a simple economic setting: A comparison," Chaos, Solitons & Fractals, Elsevier, vol. 29(3), pages 653-670.
    6. Cloutier, Lucien Martin & Rowley, Robin, 2003. "Simulation, quantitative economics and econometrics: electronic infrastructure and challenges to methodological standards," European Journal of Economic and Social Systems, Lavoisier, vol. 16(1), pages 11-32.
    7. Mordecai Ezekiel, 1938. "The Cobweb Theorem," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 52(2), pages 255-280.
    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. Domenico Colucci & Vincenzo Valori, 2011. "Can Endogenous Participation Explain Price Volatility? Evidence from an Agent-Based Cobweb Model," Computational Economics, Springer;Society for Computational Economics, vol. 38(3), pages 425-437, October.
    2. Fausto, Cavalli, 2016. "A cobweb model with alternating demand and supply functions," Working Papers 325, University of Milano-Bicocca, Department of Economics, revised 07 Feb 2016.
    3. Thomas Barré, 2011. "Price expectations and price dynamics: the case of the rice sector in developing Asia," Working Papers hal-00630711, HAL.
    4. Latusek, Dominika & Vlaar, Paul W.L., 2018. "Uncertainty in interorganizational collaboration and the dynamics of trust: A qualitative study," European Management Journal, Elsevier, vol. 36(1), pages 12-27.
    5. Aadland, David, 2004. "Cattle cycles, heterogeneous expectations and the age distribution of capital," Journal of Economic Dynamics and Control, Elsevier, vol. 28(10), pages 1977-2002, September.
    6. Cees Diks & Cars Hommes & Valentyn Panchenko & Roy Weide, 2008. "E&F Chaos: A User Friendly Software Package for Nonlinear Economic Dynamics," Computational Economics, Springer;Society for Computational Economics, vol. 32(1), pages 221-244, September.
    7. Min, Shi & Wang, Xiaobing & Liu, Min & Jikun, Huang, 2018. "The Asymmetric Response of Farmers to the Expected Change of Rubber Price: the Roles of Sunk Cost and Path Dependency," 2018 Annual Meeting, August 5-7, Washington, D.C. 274122, Agricultural and Applied Economics Association.
    8. Dieci, Roberto & Mignot, Sarah & Westerhoff, Frank, 2022. "Production delays, technology choice and cyclical cobweb dynamics," Chaos, Solitons & Fractals, Elsevier, vol. 156(C).
    9. Iavor Marangozov, 2005. "From Practice to Theory of the International Joint Ventures," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 2, pages 44-77.
    10. Femenia, Fabienne, 2010. "Impacts of Stockholding Behaviour on Agricultural Market Volatility: A Dynamic Computable General Equilibrium Approach," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 59(3).
    11. Hommes, Cars & Lux, Thomas, 2013. "Individual Expectations And Aggregate Behavior In Learning-To-Forecast Experiments," Macroeconomic Dynamics, Cambridge University Press, vol. 17(2), pages 373-401, March.
    12. Gideon Bornstein & Per Krusell & Sergio Rebelo, 2017. "A World Equilibrium Model of the Oil Market," NBER Working Papers 23423, National Bureau of Economic Research, Inc.
    13. Niek Koning & Arthur Mol, 2009. "Wanted: institutions for balancing global food and energy markets," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 1(3), pages 291-303, September.
    14. Chad Fiechter & Todd Kuethe & Michael Langemeier & James Mintert, 2025. "Change in farmer expectations from information surprises in the corn market," American Journal of Agricultural Economics, John Wiley & Sons, vol. 107(1), pages 231-247, January.
    15. Emeric Lendjel, 1998. "L'origine statistique du diagramme du cobweb," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00268370, HAL.
    16. Tuinstra, Jan & Wegener, Michael & Westerhoff, Frank, 2014. "Positive welfare effects of trade barriers in a dynamic partial equilibrium model," Journal of Economic Dynamics and Control, Elsevier, vol. 48(C), pages 246-264.
    17. Tomek, William G. & Robinson, Kenneth L., 1977. "PART V. Agricultural Price Analysis and Outlook," AAEA Monographs, Agricultural and Applied Economics Association, number 337217.
    18. Sophie Mitra & Jean‐Marc Boussard, 2012. "A simple model of endogenous agricultural commodity price fluctuations with storage," Agricultural Economics, International Association of Agricultural Economists, vol. 43(1), pages 1-15, January.
    19. Emeric Lendjel, 2000. "The statistical origin of the cobweb diagram," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-03243880, HAL.
    20. Sonnemans, Joep & Hommes, Cars & Tuinstra, Jan & van de Velden, Henk, 2004. "The instability of a heterogeneous cobweb economy: a strategy experiment on expectation formation," Journal of Economic Behavior & Organization, Elsevier, vol. 54(4), pages 453-481, August.

    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:ags:eaa110:49842. 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: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/eaaeeea.html .

    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.