Geographical indications as factors of market value: Price premiums and their drivers in the hungarian off-trade wine market

Abstract

Using the name of the production zone to differentiate agricultural products has a longstanding tradition. Theory suggests that some of these names have a market value as they represent the common reputation of the producers and thus may contribute to dissolving the information asymmetry between producers and consumers. This study takes the example of the Hungarian off-trade wine market to show that price premia are attainable by using some GIs. It is revealed that group homogeneity is an essential factor of collective decisions on higher quality standards, which are important drives of price premia. Moreover, barriers to entry and the quality of the demarcated area are also related to the prices attainable by using GIs.