Identifying the effect of unobserved quality and expert reviews in the pricing of experience goods: Empirical application on Bordeaux wine

Dubois, Pierre and Nauges, Celine (2010) Identifying the effect of unobserved quality and expert reviews in the pricing of experience goods: Empirical application on Bordeaux wine. International Journal of Industrial Organization, 28 3: 205-212. doi:10.1016/j.ijindorg.2009.08.003

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Author Dubois, Pierre
Nauges, Celine
Title Identifying the effect of unobserved quality and expert reviews in the pricing of experience goods: Empirical application on Bordeaux wine
Journal name International Journal of Industrial Organization   Check publisher's open access policy
ISSN 0167-7187
Publication date 2010-05-01
Year available 2009
Sub-type Article (original research)
DOI 10.1016/j.ijindorg.2009.08.003
Volume 28
Issue 3
Start page 205
End page 212
Total pages 8
Place of publication Amsterdam, Netherlands
Publisher Elsevier BV
Language eng
Abstract We propose a structural empirical approach à la Olley and Pakes (1996) to disentangle the effect of experts' grades from the effect of unobserved quality on the pricing of experience goods. Using a panel data set of 108 châteaux selling wine on the “en primeur” market of Bordeaux, we confirm that experts' grades affect producers' choice of “en primeur” price above the effect of unobserved wine quality. Our empirical results also show that failing to control for endogeneity caused by the omission of unobserved quality leads to over-estimate the influence of experts' grades on the “primeur” price.
Keyword Experience good
Unobserved quality
Expert reviews
Structural econometrics
Q-Index Code C1
Q-Index Status Provisional Code
Institutional Status Non-UQ
Additional Notes Available online 29 August 2009

Document type: Journal Article
Sub-type: Article (original research)
Collection: School of Economics Publications
 
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Citation counts: TR Web of Science Citation Count  Cited 6 times in Thomson Reuters Web of Science Article | Citations
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Created: Fri, 30 Sep 2011, 01:20:01 EST by Alys Hohnen on behalf of School of Economics