GASTRONOMICHIERARCHIESOFVALUE

The Market for French AOC Wines

Emily Gullickson International Thesis Forum May 5, 2010

The Food Economy

Agriculture& theGlobalMarkets

Fast Food vs. Slow Food

buono,pulito,egiusto

Value,Quality &Differentiation

Willingnessto Pay

Brands,Marketing,Reputation,& Standards

Labels“Good Source of Vitamin C”

“Prevents Cancer”

“425 Calories”

C.O.O.L.

GeographicIndications ofOrigin

What is theeffect of alabeling systemon prices?

France

Varietals,Vintages & Terroir

Appellation d’Origine Contrôlée

Bordeaux

vv

What is theeffect of alabeling systemon prices?

13 Regions

314 Appellations

77,590 bottles of wine

February 2010

The Model

Dependent Variable:

Price

Independent Variables:

AOCVintageRegion

AOC Area RatioAOC Production Ratio

Hedonic Price Model with Interactions:

Price = β 0+ β1×Q + β2×K + β3×R + β4×q + β5×r + λ0×Q +λ1(Q×K)+λ2(Q×R)+λ3(Q×q)+ λ4(Q×r)

A quality label alonedoes not increaseregional, anti-competitivedistortions inthe food economy.

ResultsQ = - %Q×Age = + 182%Q×Area = +33%Q×Prod = +79%Q×Age×Area = +84%Q×Age×Prod = +130%

France

Bordeaux

vv

What is the effectof a labelingsystem on thewine market?

The AOC systemboth solves &creates a marketfailure.

As a form of productdifferentiation, theAOC provides marketinformation whilesetting a standard.

If enough producers join thestandard, thenthey obtainmarket power.

What is the effectof a labelingsystem on thefood economy?

New Information Market

New Institutions

Globalism&Regionalism

Fast Food vs. Slow Food

Acknowledgments:My advisor, Professor Thierry Warin

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