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How Income and Crowding Effects influence the World Market for French Wines

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  • Fabien Candau

    (CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour)

  • Florent Deisting
  • Julie Schlick

Abstract

Wine prices rose rapidly between 2001 and 2011 but have now stagnated. The growth phase could be explained by the increased demand from emerging markets while the subsequent stagnation may result from the crowding effect caused by the entry of numerous new varieties onto the wine market. The generalized model of ideal variety proposed by Hummels and Lugovskyy (2009) combines these two elements and focusing on French exporters, we find partial support for this explanation at the world level. A 1% increase in GDP per-capita (income effect) generated an increase in price of 1.13% between 2001 and 2011. In contrast a 1% increase in market size (competition effect) reduced prices by 1.10% over the same period. This paper goes further into the analysis of these effects by considering wine exports according to the mode of transport used and indirectly evaluates economies of scale when wine is exported by land, sea or air (via a gravity equation). Economies of scale are observed for transport by plane and ship but not for road. A 10% increase in the value of wine exported by road (plane) leads to a rise (reduction) in transport costs of 0.5% (19%).

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  • Fabien Candau & Florent Deisting & Julie Schlick, 2016. "How Income and Crowding Effects influence the World Market for French Wines," Working papers of CATT hal-01847938, HAL.
    • Handle: RePEc:hal:wpcatt:hal-01847938
    Note: View the original document on HAL open archive server: https://hal.science/hal-01847938
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    3. Olivier BARGAIN & Jean-Marie CARDEBAT & Raphaël CHIAPPINI, 2020. "Trade Uncorked: Genetic Resistance and Quality Heterogeneity in Wine Exports," Bordeaux Economics Working Papers 2020-18, Bordeaux School of Economics (BSE).
    4. Wakuo Saito & Makoto Nakakita & Teruo Nakatsuma, 2024. "Comparative Analysis of Japanese Rice Wine Export Trends: Large Firms in the Nada Region vs. SMEs in Other Regions," World, MDPI, vol. 5(3), pages 1-23, August.
    5. Angelo Puccia & César M. Mora Márquez & Julia M. Núñez-Tabales, 2022. "Promotion of European Wines in Third Countries within the Common Market Organisation Framework: The Case of France," Economies, MDPI, vol. 10(2), pages 1-15, February.

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