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The Price Premium for Organic Wines: Estimating a Hedonic Farm-Gate Price Equation*

Published online by Cambridge University Press:  28 June 2013

Alessandro Corsi  and
Steinar Strøm
Alessandro Corsi
Affiliation:
Università di Torino, Department of Economics, Lungo Dora 100, 10153 Torino, Italy, e-mail: [email protected], Tel. +39 0116704409
Steinar Strøm
Affiliation:
Università di Torino, Department of Economics, Lungo Dora 100, 10153 Torino, Italy, and University of Oslo, Norway, e-mail: [email protected]
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Abstract

Organic wines are increasingly produced and appreciated. Because organic production is more costly, a crucial question is whether they benefit from a price premium. We estimate hedonic price functions for Piedmont organic and conventional wines. We use data on the production side in addition to variables of interest to consumers. Our results show that, along with characteristics of interest to consumers, some farm and producer characteristics not directly relevant for consumers do significantly affect wine prices. We find that organic wine tends to obtain higher prices than conventional wine. The price premium is not simply an addition to other price components; organic quality modifies the impact of the other variables on price. (JEL Classification: C21, D49, L11, Q12)

Keywords

Organic winehedonic priceprice premiumPiedmont
Type
Research Article
Information
Journal of Wine Economics , Volume 8 , Issue 1 , May 2013 , pp. 29 - 48
Copyright
Copyright © American Association of Wine Economists 2013 

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Footnotes

*

The authors thank Orley Ashenfelter for useful suggestions on an earlier draft of the paper and the editor and an anonymous referee of this Journal for pointing out errors and unclear points. Remaining errors are obviously ours.

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