Globalization, Superstars, and the Importance of Reputation: Theory & Evidence from the Wine Industry

20 Pages Posted: 15 Feb 2009 Last revised: 29 Jan 2012

Michael Gibbs

University of Chicago Booth School of Business; Institute for the Study of Labor (IZA)

Mikel Tapia

Universidad Carlos III de Madrid - Department of Business Administration

Frederic Warzynski

University of Aarhus - Department of Economics

Date Written: February 14, 2009

Abstract

We develop a simple model of the effects of reputation on wine prices. An increasing fraction of consumers who are "naive" (less well informed about wine quality) results in a stronger sensitivity of wine prices to ratings of quality. We then use data on prices and Robert Parker's ratings of wines, to show that prices have become more related to Parker ratings over time. In addition, we find that a change in Parker rating has a stronger effect on price, the stronger is the wine's reputation.

Keywords: Reputation, Globalization, Wine

JEL Classification: L15, L66, Q11, F14

Suggested Citation

Gibbs, Michael and Tapia, Mikel and Warzynski, Frederic, Globalization, Superstars, and the Importance of Reputation: Theory & Evidence from the Wine Industry (February 14, 2009). Chicago Booth School of Business Research Paper No. 09-13. Available at SSRN: https://ssrn.com/abstract=1343732 or http://dx.doi.org/10.2139/ssrn.1343732

Michael Gibbs (Contact Author)

University of Chicago Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

Mikel Tapia

Universidad Carlos III de Madrid - Department of Business Administration ( email )

Calle Madrid 126
Getafe, Madrid, Madrid 28903
Spain

Frederic Warzynski

University of Aarhus - Department of Economics ( email )

hermodsvej 22
DK-8230 Åbyhøj
Denmark
+45 89 48 61 95 (Phone)

HOME PAGE: http://www.hha.dk/~fwa/frederic.htm

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