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Globalization, Superstars, and the Importance of Reputation: Theory & Evidence from the Wine Industry

Author

Listed:
  • Gibbs, Michael

    (University of Chicago GSB)

  • Tapia, Mikel

    (Universidad Carlos III de Madrid)

  • Warzynski, Frederic

    (Department of Economics, Aarhus School of Business)

Abstract

We develop a simple model of the effects of reputation on wine prices. An increasing fraction of consumers who are “naïve” (less well informed about wine quality) results in a stronger sensitivity of wine prices to ratings of quality. We then use data on prices and Robert Parker’s ratings of wines, to show that prices have become more related to Parker ratings over time. In addition, we find that a change in Parker rating has a stronger effect on price, the stronger is the wine’s reputation.

Suggested Citation

  • Gibbs, Michael & Tapia, Mikel & Warzynski, Frederic, 2009. "Globalization, Superstars, and the Importance of Reputation: Theory & Evidence from the Wine Industry," Working Papers 09-3, University of Aarhus, Aarhus School of Business, Department of Economics.
    • Handle: RePEc:hhs:aareco:2009_003
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    File URL: http://www.hha.dk/nat/wper/09-3_fwa.pdf
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    Cited by:

    1. Berríos, Rodrigo & Saens, Rodrigo, 2012. "The country brand trap," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    2. Clarissa Laura Maria Spiess Bru, 2023. "Does the Tasting Note Matter? Language Categories and Their Impact on Professional Ratings and Prices," Working Papers Dissertations 105, Paderborn University, Faculty of Business Administration and Economics.
    3. Stephen Bazen & Jean Marie Cardebat & Magalie Dubois, 2022. "From Gurus to Geeks? The Role of Customer and Expert Ratings in a Hedonic Analysis of French Red Wine Prices," Working Papers hal-03891458, HAL.
    4. Castriota, Stefano & Corsi, Stefano & Frumento, Paolo Dyno & Ruggeri, Giordano, 2021. "Does quality pay off? “Superstar” wines and the uncertain price premium across quality grades," Working Papers 321846, American Association of Wine Economists.
    5. Corsi, Alessandro & Strøm, Steinar, 2013. "The Price Premium for Organic Wines: Estimating a Hedonic Farm-Gate Price Equation," Journal of Wine Economics, Cambridge University Press, vol. 8(1), pages 29-48, May.
    6. Alex Albright & Peter Pedroni & Stephen Sheppard, 2018. "Uncorking Expert Reviews with Social Media: A Case Study Served with Wine," Department of Economics Working Papers 2018-03, Department of Economics, Williams College.

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    JEL classification:

    • A10 - General Economics and Teaching - - General Economics - - - General

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