Hostname: page-component-8448b6f56d-m8qmq Total loading time: 0 Render date: 2024-04-18T04:00:11.673Z Has data issue: false hasContentIssue false
  • English
  • Français

Critical Exposure and Price-Quality Relationships for New World Wines in the U.S. Market*

Published online by Cambridge University Press:  08 June 2012

Peter W. Roberts  and
Ray Reagans
Peter W. Roberts
Affiliation:
Goizueta Business School, Emory University, Atlanta, GA 30306,peter_roberts@bus.emory.edu
Ray Reagans
Affiliation:
Tepper School of Business, Carnegie Mellon University, Pittsburgh, PA 15213,rreagans@andrew.cmu.edu
Get access Rights & Permissions [Opens in a new window]

Abstract

Notwithstanding the observed positive correlations between critics' quality ratings and wine prices, the range of these correlations is quite high. In light of this, researchers must consider the factors that either strengthen or weaken the association between quality ratings and prices. In this paper, we propose that the slope of the relationship between quality ratings and wine prices is moderated by the amount of attention that producers receive. Because attention increases with a producer's critical exposure (i.e., its history of critical coverage), price-quality relationships will be steeper for producers with more critical exposure. This prediction is confirmed in an analysis of New World wines selling into the U.S. market over the 1987 to 2001 period. While a wine's price is a positive function of its own quality rating, the strength of the price-quality relationship increases with a producer's critical exposure (JEL classifications: L11, L13, L15).

Type
Articles
Information
Journal of Wine Economics , Volume 2 , Issue 1 , Spring 2007 , pp. 84 - 97
Copyright
Copyright © American Association of Wine Economists 2007

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Allen, M. et al. . (1998). New World of Wine. London: Reed Consumer Books: Mitchell Beazley.Google Scholar
Anonymous (1999). Playing the rating game, The Economist, Vol. September 18, 94–96.Google Scholar
Arkell, J. (1999). New World Wines. London: Ward Lock Publishing.Google Scholar
Arrow, K.J. (1974). The Limits of Organization. New York: Norton.Google Scholar
Bagwell, K. and Riordan, M.H. (1991). High and declining prices signal product quality. American Economic Review, 81, 224–239.Google Scholar
Benjamin, B.A. and Podolny, J.M. (1999). Status, quality, and social order in the California wine industry. Administrative Science Quarterly, 44, 563–589.CrossRefGoogle Scholar
Haeger, J.W. and Storchmann, K. (2006). Prices of American pinot noir wines: Climate, craftsmanship, critics. Agricultural Economics, 35, 67–78.CrossRefGoogle Scholar
Hannan, M.T. and Carroll, G.R. (1992). Dynamics of Organizational Populations: Density, Legitimation, and Competition. New York: Oxford University Press.CrossRefGoogle Scholar
Hoch, S.J. and Ha, Y.-W. (1986). Consumer learning: Advertising and the ambiguity of product experience. Journal of Consumer Research, 13, 221–233.CrossRefGoogle Scholar
Jones, G.V. and Storchmann, K.-H. (2001). Wine market prices and investment under uncertainty: An econometric model for Bordeaux Crus Classés. Agricultural Economics, 26, 115–133.CrossRefGoogle Scholar
Landon, S. and Smith, C.E. (1997). The use of quality and reputation indicators by consumers: The case of Bordeaux Wine. Journal of Consumer Policy, 20, 289–323.CrossRefGoogle Scholar
Lecocq, S. and Visser, M. (2006). What determines wine prices: Objective vs. sensory characteristics. Journal of Wine Economics, 1, 42–56.CrossRefGoogle Scholar
Nelson, P. (1970). Information and consumer behavior. Journal of Political Economy, 78, 311–329.CrossRefGoogle Scholar
Olshavsky, R.W. (1994). Attention as an epiphenomenon: Some implications for advertising. In Clark, E.M., Brock, T.C. and Stewart, D.W. (eds.), Attention, Attitude and Affect in Response to Advertising, 97–106. Hillsdale, NJ: Lawrence Erlbaum Associates.Google Scholar
Podolny, J.M. (1993). A status-based model of market competition. American Journal of Sociology, 98, 829–872.CrossRefGoogle Scholar
Ravid, S.A. (1999). Information, blockbusters, and stars: A Study of the film industry. The Journal of Business, 72, 463–492.CrossRefGoogle Scholar
Schamel, G. and Anderson, K. (2003). Wine quality and varietal, regional and winery reputations: Hedonic prices for Australia and New Zealand. The Economic Record, 79, 357–369.CrossRefGoogle Scholar
Shapiro, C. (1983). Premiums for high quality products as returns to reputations. Quarterly Journal of Economics, 98, 659–679.CrossRefGoogle Scholar
Shrum, W.M. (1991). Critics and publics: Cultural mediation in highbrow and popular performing arts. American Journal of Sociology, 97, 347–375.CrossRefGoogle Scholar
Shrum, W.M. (1996). Fringe and Fortune: The Role of Critics in High and Popular Art. Princeton: Princeton University Press.CrossRefGoogle Scholar
Taber, G.M. (2005). Judgment of Paris: California vs. France and the Historic 1976 Paris Tasting That Revolutionized Wine. New York: Scribner.Google Scholar
Tellis, G.J. and Wernerfelt, B. (1987). Competitive price and quality under asymmetric information. Marketing Science, 6, 240–253.CrossRefGoogle Scholar
Vakratsas, D. and Ambler, T. (1999). How advertising really works. Journal of Marketing, 63, 26–43.CrossRefGoogle Scholar
Zuckerman, E.W. (1999). The categorical imperative: Securities analysts and the illegitimacy discount. American Journal of Sociology, 104, 1398–1438.CrossRefGoogle Scholar
Zuckerman, E.W., Kim, T.-Y., Ukanwa, K. and von Rittmann, J. (2003). Robust identities or nonentities? Typecasting in the feature-film labor market. American Journal of Sociology, 108, 1018–1074.CrossRefGoogle Scholar