A market-based pricing model for wines: Test over the period 1988-2007
Year:
2008
Authors:
Jean Francois Outreville (United Nations Conference on Trade and Development, Geneva)
Abstract:
Contrary to the estimation of an hedonic price equation which include all factors explaining prices, this paper suggest a model to explain the price of a speci c wine by the market price for wines. In this simpli ed relationship, all factors explaining the price of a wine are summarized by two factors: the market and the price of a basic wine. The research is based on data collected in the review of the Savour Club for wines for sale over the period 1988-2007. It is found that the price of wine is signi cantly explained by its covariance with a market portfolio and that this relation can be used to classify wine appellations in segregated markets.
Published in Review Enometrica, March 2008