Demand under product differentiation: an empirical analysis of the US wine market* |
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| Authors: | Timothy R. Davis Fredoun Z. Ahmadi‐Esfahani Susana Iranzo |
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| Affiliation: | 1. University of Sydney;2. Tim Davis (email: ) is a PhD Candidate in Agricultural and Resource Economics at the University of Sydney. Fredoun Ahmadi‐Esfahani is an Associate Professor in Agricultural and Resource Economics and Susana Iranzo is a Lecturer in Economics, both at The University of Sydney. Authors thank Kenneth Clements and John Asker for useful comments on earlier drafts of this article, and Haiyan Deng for helpful discussions. Authors are also grateful to an Associate Editor and two anonymous Journal referees for helpful comments and suggestions. The usual disclaimer applies. |
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| Abstract: | Oversupply has led to a number of perplexities for the Australian wine industry in recent times. When disaggregated from the industry level, however, the problem can be better described as a range of attribute‐specific disequilibria. To date, the solutions to this problem have predominantly revolved around supply‐side policies of reducing output through crop thinning or vine pulling. By contrast, this paper focuses on the demand side and argues that the disequilibria may be reduced by gaining a better understanding of the demand for Australian wine. A discrete choice model of product differentiation is used to estimate the demand for wine in Australia's second largest export market, the United States. Implications of the analysis are explored. |
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| Keywords: | demand for wine nested logit oversupply product differentiation |
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