Development Uncorked: Reputation Acquisition in the New Market for Chilean Wines in the UK

52 Pages Posted: 1 Mar 2010

See all articles by Rocco Macchiavello

Rocco Macchiavello

University of Oxford - Nuffield College of Medicine; Centre for Economic Policy Research (CEPR)

Date Written: February 2010

Abstract

This paper studies learning effects in new markets using a panel of relationships between Chilean wineries and distributors in the UK. Controlling for winery, distributors and time effects, FOB prices increase by at least three percent with every additional year in a relationship while export volumes do not drop. The implied shift in demand is not explained by improvements in product quality, or by distributor, product and match-specific effects. FOB prices responses to relationship specific exogenous changes in marketing costs induced by exchange rates dynamics suggest that wineries bargaining power increases over time. Following their first relationship in the market, wineries are re-matched to distributors of higher quality. The evidence suggests that learning about wineries is an important determinant of the positive age effects on FOB prices but also that learning takes considerably long time. Policy implications are discussed.

Keywords: intermediation, learning, reputation, trade costs

JEL Classification: D23, F14, L14, M31, O12

Suggested Citation

Macchiavello, Rocco, Development Uncorked: Reputation Acquisition in the New Market for Chilean Wines in the UK (February 2010). CEPR Discussion Paper No. DP7698. Available at SSRN: https://ssrn.com/abstract=1559654

Rocco Macchiavello (Contact Author)

University of Oxford - Nuffield College of Medicine ( email )

New Road
Oxford, OX1 1NF
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Register to save articles to
your library

Register

Paper statistics

Downloads
7
Abstract Views
749
PlumX Metrics