Price Heterogeneity and Vine Homogeneity: An Ordered Logit Hedonic Price Estimation

Abstract

Consumers face complex choices when they buy wine: wine is a highly differentiated product sold at prices that vary over a wide range. This paper aims to provide monetary valuation of some relevant credence attributes of the wine, such as certifications and quality ratings made by expert tasters. In order to value the latter, a hedonic price estimation was performed on a specific Italian grape variety (Aglianico). The implicit price of DOC-DOCG certification is of extreme importance. It gives access to a collective reputation and enables a premium price to be captured from consumers.