Price Dispersion in Wines

63 Pages Posted: 4 Feb 2022

See all articles by Jean-Marie Cardebat

Jean-Marie Cardebat

University of Bordeaux

Olivier Gergaud

Kedge - Bordeaux Business School

Pierre Regibeau

European Union - European Commission

Katharine Rockett

University of Essex - Department of Economics; Centre for Economic Policy Research (CEPR)

Date Written: December 2021

Abstract

We investigate price dispersion in restaurant sales of wine. We measure empirically the change in price dispersion as competition varies, finding that price dispersion increases with competition. We then propose a spatial model capturing the unique features of restaurant dining to explain this empirical regularity. The model reveals an indirect effect flowing through the price of food, which is announced and known by customers, to the price of wine, which is only revealed once the customer enters the restaurant and receives the wine list. The results add to the literature on "add ons" and price dispersion in bundled good markets.

Keywords: price dispersion, restaurant, spatial competition, Wine

JEL Classification: L11, L13, L90

Suggested Citation

Cardebat, Jean-Marie and Gergaud, Olivier and Regibeau, Pierre and Rockett, Katharine, Price Dispersion in Wines (December 2021). CEPR Discussion Paper No. DP16784, Available at SSRN: https://ssrn.com/abstract=4026649

Jean-Marie Cardebat (Contact Author)

University of Bordeaux ( email )

Avenue Léon Duguit
Bordeaux, 33000
France

Olivier Gergaud

Kedge - Bordeaux Business School ( email )

Domaine de Luminy - BP 921
BP 921
Marseille, PACA 13288
France

Pierre Regibeau

European Union - European Commission ( email )

Rue de la Loi 200
Brussels, B-1049
Belgium

Katharine Rockett

University of Essex - Department of Economics ( email )

Wivenhoe Park
Colchester CO4 3SQ
United Kingdom
+44 1206 873 333 (Phone)
+44 1206 873 724 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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