Did the Great Recession change the regional reputation premium for wine in the US?

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Abstract

Wine is an experience good and also (at least under certain circumstances and to a certain extent) a conspicuous consumption good. As such, wine buyers should be willing to pay a premium for regional reputation to avoid risk and to send signals about their wealth and social status. At the same time, wine is an annually produced good; every year new bottles arrive to wine stores. Accordingly, a wine store's manager has to periodically clear the store's inventory. Statistical analyses indicate that, during the Great Recession in the US, two developments - a substantial decline in income and a rise in information sharing via the internet and social media - had a dampening effect on the regional reputation premium and lowered the price-quality ratio differences among different wine regions. Moreover, during the same time period, the discount rates necessary to clear inventories significantly increased. © 2013 UniCeSV, University of Florence. Production and hosting by Elsevier B.V. All rights reserved.

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Gokcekus, O., & Finnegan, C. M. (2013). Did the Great Recession change the regional reputation premium for wine in the US? Wine Economics and Policy, 2(1), 27–32. https://doi.org/10.1016/j.wep.2013.05.004

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