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What Determines Exports of Luxury Products? The Case of Cognac*

Published online by Cambridge University Press:  19 May 2017

Antoine Bouët ,
Charlotte Emlinger  and
Viola Lamani
Antoine Bouët*
Affiliation:
GREThA, Department of Economics, University of Bordeaux, Avenue Léon Duguit, 33608 Pessac cedex, France; and International Food Policy Research Institute (IFPRI), 2033 K St, NW, Washington, DC 20006-1002
Charlotte Emlinger
Affiliation:
Centre d’Études Prospectives et d'Informations Internationales (CEPII), 113 rue de Grenelle, 75007 Paris, France; email: [email protected].
Viola Lamani
Affiliation:
GREThA, Department of Economics, University of Bordeaux, Avenue Léon Duguit, 33608 Pessac cedex, France; e-mail: [email protected].
*
e-mail: [email protected] (corresponding author).
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Abstract

This paper analyzes the determinants of Cognac brandy exports using a unique database on Cognac shipments to more than 140 destinations between 1996 and 2013. We use this database to construct descriptive statistics concerning the evolution of Cognac exports during this period. We also construct a database of protectionist policies that affect worldwide Cognac exports. We analyze the determinants of Cognac exports and base our empirical strategy on Heckman's (1979) procedure. We estimate successively the impact of geographical, demand and policy factors on the extensive margin of trade and the intensive margin of trade. We also control for the possibility of an endogeneity bias on the probability of trade. We show that i) as with other luxury products, the elasticity of Cognac exports to distance is negative, significant, and relatively small, while the elasticity to gross domestic product (GDP) is positive, significant, and relatively large; and ii) average customs duties do not have a significant impact on the intensive margin but significantly and positively affect the probability of trade. We discuss this last result and correct the endogeneity bias using tax revenues of importing countries in percentage of GDP as an instrument. (JEL Classifications: F10, F14)

Keywords

international tradeluxury productsgravity equationCognac
Type
Articles
Information
Journal of Wine Economics , Volume 12 , Issue 1 , February 2017 , pp. 37 - 58
Copyright
Copyright © American Association of Wine Economists 2017 

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Footnotes

*

We thank two anonymous referees and participants in a LAREFI seminar (November 12, 2015), a MAD conference in Bordeaux (November 19–20, 2015), and an IATRC conference in Clearwater (December 13–15, 2015) for their helpful comments and suggestions, in particular Jason Brent, Jean-Marie Cardebat, Anne-Célia Disdier, Sébastien Jean, and Dominique Van der Mensbrugghe. All errors are ours.

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