Analysing Firm‐Level Price Effects for Differentiated Products: The Case of Australian Wine Producers

20 Pages Posted: 23 Mar 2016

See all articles by Edward Oczkowski

Edward Oczkowski

Charles Sturt University - Faculty of Commerce

Date Written: March 2016

Abstract

The paper discusses and illustrates estimation methods for identifying and modelling the influence of producers on the prices for a differentiated product. A two‐step fixed effects approach is contrasted to the random effects specification. The techniques are employed to analyse prices for over 260 Australian premium wine producers. The fixed effects specification is preferred given significant correlation between wine attributes and random producer effects. The estimation of fixed producer price effects identifies statistically significant price premiums and discounts, which average 15%. Fixed producer price effects are estimated to depend on the quality reputation of the producer, its level of experience, producer size and the use of multibrands by conglomerates. In part, results indicate that price discounts are associated with producers who have low‐quality reputations, are small and recently established.

Suggested Citation

Oczkowski, Edward, Analysing Firm‐Level Price Effects for Differentiated Products: The Case of Australian Wine Producers (March 2016). Australian Economic Papers, Vol. 55, Issue 1, pp. 43-62, 2016, Available at SSRN: https://ssrn.com/abstract=2753313 or http://dx.doi.org/10.1111/1467-8454.12060

Edward Oczkowski (Contact Author)

Charles Sturt University - Faculty of Commerce ( email )

Wagga Wagga, NSW 2678
Australia
061 02 69332521 (Phone)
061 02 69332125 (Fax)

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