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Globalization, Superstars, and the Importance of Reputation: Theory & Evidence from the Wine Industry

Research output: Working paperResearch

Documents

  • Wp 09-3

    Final published version, 337 KB, PDF document

  • Michael Gibbs, University of Chicago GSB & IZA, United States
  • Mikel Tapia, Universidad Carlos III de Madrid, Spain
  • Frederic Warzynski

We develop a simple model of the effects of reputation on wine prices. An increasing fraction of consumers who are "naïve" (less well informed about wine quality) results in a stronger sensitivity of wine prices to ratings of quality. We then use data on prices and Robert Parker's ratings of wines, to show that prices have become more related to Parker ratings over time. In addition, we find that a change in Parker rating has a stronger effect on price, the stronger is the wine's reputation.

Original languageEnglish
Place of publicationAarhus
PublisherAarhus School of Business, Aarhus University, Department of Economics
Number of pages33
ISBN (Print)9788778824189
ISBN (Electronic)9788778824196
Publication statusPublished - 2009

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