Wine price and quality: in search of a signaling equilibrium in 2001 California Cabernet Sauvignon.

摘要

This article examines the relationship between the price and quality rating of wine. The quality rating and release prices of 163 2001 California Cabernet Sauvignon wines was drawn from an issue of the Wine Spectator. The price ranges from $7 to $300 per bottle. Quality ratings on a 100-point scale range from 68 to 96 points. Regression analysis shows that the quality rating explains a wine's release price. But the best regression explains only 45% of the variance in winery release price, meaning that much of the variance is not captured by quality and other variables. The unexplained variance in wine price suggests that a complete signalling equilibrium has not been achieved in the California cabernet sauvignon market. Adjustment by both buyers and sellers is expected in the future. This article also examines the characteristics of wine markets that might help refocus theoretical economic research on the wine price-quality relationship. A movement away from hedonic pricing methods and their reliance on assumptions of competitive markets and perfect information is suggested. It is also suggested that imperfect competition and imperfect, asymmetric information characterize wine markets, and that the theoretical underpinnings of empirical work need to recognize this fact.