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Department of Economics, Aarhus School of Business, University of Aarhus Working Papers, Department of Economics, Aarhus School of Business, University of Aarhus

No 09-3:
Globalization, Superstars, and the Importance of Reputation: Theory & Evidence from the Wine Industry

Michael Gibbs, Mikel Tapia and Frederic Warzynski ()

Abstract: 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.

Keywords: No; keywords; (follow links to similar papers)

JEL-Codes: A10; (follow links to similar papers)

33 pages, February 9, 2009

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