publication . Part of book or chapter of book . Article . Other literature type . 2007

Segmenting the Wine Market Based on Price: Hedonic Regression when Different Prices mean Different Products

Costanigro, Marco; McCluskey, Jill J.; Mittelhammer, Ron C.;
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  • Published: 01 Sep 2007
  • Publisher: WORLD SCIENTIFIC
Abstract
Many economists have estimated hedonic price functions for red and white wine. However, estimating a single hedonic price function imposes the assumption that the implicit prices of the attributes are the same for any red or white wine. We argue that even within these two categories, wines are differentiated, and disregarding this heterogeneity causes an aggregation bias in the estimated implicit prices. By estimating hedonic functions specific to price ranges, we show that the wine market is segmented into several product classes or market segments. We find that a model accounting for the existence of wine classes has greater ability to explain the variability ...
Subjects
free text keywords: Market segmentation, Economics, White Wine, Wine, Microeconomics, Hedonic regression, Hedonic index
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