Scandinavian Working Papers in Economics

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

No 02-6: What does California have in common with Finland, Norway and Sweden?

Jan Bentzen () and Valdemar Smith ()
Additional contact information
Jan Bentzen: Department of Economics, Aarhus School of Business, Postal: The Aarhus School of Business, Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Denmark
Valdemar Smith: Department of Economics, Aarhus School of Business, Postal: The Aarhus School of Business, Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Denmark

Abstract: The aim of this paper is to analyse the retail prices on wine in different countries. In general, country-specific price differences on identical wines are expected to reflect differences in taxes, import prices, transportation and other costs. Also the competitive conditions on the retail markets in the relevant countries are important. Accordingly, lack of competition at the retail level, high import prices and high duties on wine all contribute to increase wine prices. Next, consumer prices on wine are expected to be relatively lowest in the producer country and even lower on the local markets in the producing region. The Nordic countries are located far away from California and they all tax wine higher than the State of California. Some, e.g. Finland, Norway and Sweden, have state monopoly in the retail trade of wine and spirits whereas the sales system for wine in Denmark is more in line with the Californian system. Based on price information at the retail level, the paper analyses the logic of the relative prices on identical Californian wine bought in California compared to Denmark, Finland, Norway and Sweden.

Keywords: Wine prices; Californian wines; wine taxes

JEL-codes: D40; L81; O57

17 pages, May 1, 2002

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