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The Pricing of Experience Goods: The Example of en primeur Wine
Author(s) -
Ali Héla Hadj,
Nauges Céline
Publication year - 2007
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1111/j.1467-8276.2007.00965.x
Subject(s) - wine , reputation , quality (philosophy) , business , wine tasting , commerce , hedonic pricing , economics , marketing , advertising , econometrics , food science , chemistry , social science , philosophy , epistemology , sociology
The market for “primeur” wine in the Bordeaux region allows producers to sell wine that is still in barrels. As with all experience goods, producers send quality signals to uninformed buyers. Using original data on Bordeaux wines, we show that the pricing behavior of producers depends to a large extent on their reputation, and much less on short‐term changes in quality (as measured by experts' grades). We also find that the primeur price has an informative role, since a 10% increase in primeur price leads to a 3% increase in prices on the market for bottled wine.