Demand under product differentiation: An empirical analysis of the US wine market

Identifier:  imarina:6385870

Handle: https://hdl.handle.net/20.500.11797/imarina6385870

Authors:  Davis T; Ahmadi-esfahani F; Iranzo S

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. © 2008 The Author Journal compilation © 2008 Australian Agricultural and Resource Economics Society Inc. and Blackwell Publishing Asia Pty Ltd.