Scandinavian Working Papers in Economics

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

No 07-7: Explaining champagne prices in Scandinavia - what is the best predictor?

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: This paper analyses the retail prices of champagnes sold in the Scandinavian countries. Price data for the champagnes contain nearly 380 observations including a range of quality attributes of each champagne. The empirical part of the analysis reveals that the retail prices of champagne can be fairly well explained by a hedonic price function with a degree of explanation corresponding to approximately 60 per cent. However the ratings by the wine experts, in this case Robert Parker, Wine Spectator and to a lesser extent the French ‘1855 Notation’, do just as well in terms of explaining the retail prices of champagnes. Especially the rating of champagnes by Robert Parker seems to be the most influential concerning the sales prices.

Keywords: Champagne; prices; hedonic price function; Scandinavia

JEL-codes: D40; P46; Q10

33 pages, January 1, 2007

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