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A A Semiparametric Hedonic Pricing Model of Ontario Wines

Kwong, Lester M.K., Cyr, Don, Kushner, Joseph, Ogwang, Tomson
Canadian journal of agricultural economics 2011 v.59 no.3 pp. 361-381
environmental factors, models, prices, red wines, viticulture, Ontario
Our study is the first to examine the pricing of wines produced in the Province of Ontario, Canada. Using a sample of 337 Ontario dry red wines, we construct both parametric and semiparametric hedonic pricing models. We find that our semiparametric model yields a superior fit to its parametric counterpart. We also estimate separate hedonic price functions for higher and lower priced wines which indicate that the term “Reserve” on the label and the vintage year information are important for consumers of lower priced wines whereas these attributes are not important for consumers of higher priced wines. Unlike other studies, we include both environmental and quantity variables resulting in improved fits. Thus, our results suggest that future studies should consider semiparametric hedonic pricing models and include both the quantity and environmental variables in the analysis. Finally, our results indicate that Canadian consumers for the most part look for the same attributes in wine as their counterparts in other countries do but they also look at the viticulture techniques used in the cultivation of the grapes.