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Towards a Differentiated Modelling of Origin Effects in Hedonic Analysis:An Application to Auction Prices of Specialty Coffee

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  • Teuber, Ramona
  • Herrmann, Roland

Abstract

Origin matters. This has been shown by numerous studies using either discrete choice or hedonic approaches to derive implicit prices for origin as a product attribute. In most of the hedonic studies, intercept dummies were introduced for specific regional origins and statistically significant coefficients of those variables were seen as an indication of either a superior or inferior reputation compared to products from other origins. We argue that hedonic pricing models of this type may be too simple to detect the true origin effects if assessments of a product’s sensory quality are available and interact with prior beliefs on reputation. Based on a supply-and-demand framework to explain auction prices, a reduced-form hedonic pricing model is suggested that includes intercept- as well as slope-dummy effects of the regional origin. As reputation and the objective product quality are particularly important on markets of differentiated, high-quality foods and beverages we analyze auction markets of specialty coffees. The findings for the Cup-of-Excellence data reveal that it is important to distinguish reputation, sensory quality and their interaction as determinants of coffee auction prices as well as varying origin impacts across market segments.

Suggested Citation

  • Teuber, Ramona & Herrmann, Roland, 2012. "Towards a Differentiated Modelling of Origin Effects in Hedonic Analysis:An Application to Auction Prices of Specialty Coffee," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126235, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae12:126235
    DOI: 10.22004/ag.econ.126235
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    Cited by:

    1. Otero, Jesús & Argüello, Ricardo & Oviedo, Juan Daniel & Ramírez, Manuel, 2018. "Explaining coffee price differentials in terms of chemical markers: Evidence from a pairwise approach," Economic Modelling, Elsevier, vol. 72(C), pages 190-201.
    2. Kassas, Bachir & Cao, Xiang & Gao, Zhifeng & House, Lisa A. & Guan, Zhengfei, 2023. "Consumer preferences for country of origin labeling: Bridging the gap between research estimates and real-world behavior," Journal of choice modelling, Elsevier, vol. 48(C).
    3. Leufkens, Daniel & Schröck, Rebecca, 2013. "Regulierungspolitische Effekte geschützter geografischer Herkunftsangaben der EU in einer dynamischen und qualitätspolitischen Perspektive," 53rd Annual Conference, Berlin, Germany, September 25-27, 2013 156119, German Association of Agricultural Economists (GEWISOLA).
    4. Waldman, Kurt B. & Kerr, John M., 2015. "Is Food and Drug Administration policy governing artisan cheese consistent with consumers’ preferences?," Food Policy, Elsevier, vol. 55(C), pages 71-80.

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    More about this item

    Keywords

    Demand and Price Analysis; Industrial Organization; International Relations/Trade; Marketing; Research Methods/ Statistical Methods;
    All these keywords.

    JEL classification:

    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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