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  • Thumbnail for Hedonic pricing of Californian Cabernet Sauvignon : a tiered description of regional affects
    Hedonic pricing of Californian Cabernet Sauvignon : a tiered description of regional affects by Reyda, Thomas Andrew

    The paper attempts to expand upon the collective reputation theory relating to the hedonic pricing of wine. Data was collected concerning Cabernet Sauvignons of California and a hedonics model was developed based on relevant literature. The goal was to examine the results for different scopes of region of origin, as well as introduce a collective reputation variable based on the work of Tirole. As expected, greater detail in region of origin provided superior results as well as pricing benefits for smaller sub regions of origin. The collective reputation variable behaved opposite to the expectation, with a negative effect on price. This differs from Tirole’s theory because of several fundamental reasons including: level of consumer information, multicollinearity issues and greater descriptive power of regions of origin.