Many economists have estimated hedonic price functions for red and white wine. However, estimating a single hedonic price function imposes the assumption that the implicit prices of the attributes are the same for any red or white wine. We argue that even within these two categories, wines are differentiated, and disregarding this heterogeneity causes an aggregation bias in the estimated implicit prices. By estimating hedonic functions specific to price ranges, we show that the wine market is segmented into several product classes or market segments. We find that a model accounting for the existence of wine classes has greater ability to explain the variability in the data and produces more accurate and interpretable results regarding the implicit prices of the attributes. Copyright 2007 The Agricultural Economics Society.

No abstract

Consumers are increasingly exposed to labels communicating specific processing aspects of food production, and recent state and federal legislation in the United States has called for making some of these labels mandatory. This article reviews the literature in this area and identifies the positive and negative aspects of labeling food processes. The good parts are that, under appropriate third‐party or governmental oversight, process labels can effectively bridge the informational gap between producers and consumers, satisfy consumer demand for broader and more stringent quality assurance criteria, and ultimately create value for both consumers and producers. Despite the appeal of the “Consumer Right to Know” slogan, process labeling also can have serious unintentional consequences. The bad parts are that consumers can misinterpret these labels and thus misalign their personal preferences and their actual food purchases. The ugly parts are that these labels can stigmatize food produced with conventional processes even when there is no scientific evidence that they cause harm, or even that it is compositionally any different. Based on this review of the literature, we provide three policy recommendations: (i) mandatory labeling of food processes should occur only in situations in which the product has been scientifically demonstrated to harm human health; (ii) governments should not impose bans on process labels because this approach goes against the general desire of consumers to know about and have control over the food they are eating, and it can undermine consumer trust of the agricultural sector; and (iii) a prudent policy approach is to encourage voluntary process labeling, perhaps using smart phone technology similar to that proposed in 2016 federal legislation related to foods containing ingredients that were genetically engineered.

No abstract