Estimating the Demand for Wine Using Instrumental Variable Techniques

Cuellar, Steven S.; Huffman, Ryan

doi:10.1017/s193143610000119x

Cited by 11 publications

(17 citation statements)

References 10 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…In the wine choice literature, endogeneity has been explicitly controlled for mostly in the context of aggregate demand models. Cuellar & Huffman (2008) To the best of our knowledge, only two papers deal with the endogeneity problem when modelling wine demand at the individual level using stated choice experiments. In particular, although Appleby et al (2012) do not mention endogeneity explicitly, their approach can be seen as using Wine Spectator's ratings as a proxy for quality, yielding reasonable results.…”

Section: Endogeneity In the Foods And Beverages Literaturementioning

confidence: 99%

Modelling choice when price is a cue for quality: a case study with Chinese consumers

Palma

Ortúzar

Rizzi

et al. 2016

Journal of Choice Modelling

View full text Add to dashboard Cite

Experience products are those the quality of which cannot be ascertained until after consumption, forcing consumers to base their purchase decision on an expectation of the product's quality. This expected quality is based on cues available before purchase, among which price is noteworthy, as consumers tend to believe that higher prices imply higher quality. But price also stresses the consumers' budget restriction, inducing a double-and conflicting-global effect on purchase probability. Using the traditional formulation of Random Utility Models for experience goods (i.e. introducing all attributes directly in the utility function) can lead to an endogeneity problem due to the omission of expected quality, introducing bias on the results. Using a stated wine choice experiment conducted in China as a case study, we correct for endogeneity by modelling each alternative's expected quality as a latent variable, explained by all available quality cues, including price. Then we explain choice as a tradeoff between price and expected quality. This allows us to separate both effects of price and correct for at least one source of endogeneity while being consistent with behavioural theory; this has either been ignored or not treated correctly in previous literature. Moreover, as the model requires only a quality indicator for each alternative to achieve identification, the respondents' burden increases marginally. Our results show that the use of latent variables reduces endogeneity and effectively allows to measure both effects of price separately, obtaining higher significance and correct signs for its parameters.

show abstract

Section: Endogeneity In the Foods And Beverages Literaturementioning

confidence: 99%

Modelling choice when price is a cue for quality: a case study with Chinese consumers

Palma

Ortúzar

Rizzi

et al. 2016

Journal of Choice Modelling

View full text Add to dashboard Cite

show abstract

“…Demand for wine is generated using the instrumental variable (IV) regression formula (1), introduced by [Cuellar, S. S., & Huffman, R., 2009], where the wine Figure 4 Arena Model for the Hybrid Model demand vary for price and income changes for the period. Random data are generated for the price and income using the Research Randomizer, a random number generator.…”

Section: Data Generation For Simulation Modelsmentioning

confidence: 99%

An Analytical Modelling Approach to Optimize Safety Stock of Winery Supply Chains (Wsc)

Zoysa¹,

Rupasinghe²

2017

World Conference on Supply Chain Management

View full text Add to dashboard Cite

Winery Supply Chains (WSC) are more cash sensitive as a considerable portion of inventory is kept and financed throughout the WSC due to the long production process, distances from suppliers/markets and the importance of having the correct finished goods for orders. Hence, Inventory Optimization (IO) is one of the most critical areas in a WSC. This paper is framed on introducing a Genetic Algorithm (GA) incorporating a mathematical model that integrates selected external and internal characteristics of WSCs together with demand uncertainties specific to WSC, developed by the authors to optimize the most critical type of inventory, the safety stock level of WSC. This paper further compares three main types of inventory policies, the continuous review, the periodic review policy and a hybrid of both policies, which analyze their impact on selected Key Performance Indicators (KPI). The developed simulation models incorporating the comparison, integrates demand specific for wine products to a distributor in a Winery Supply Chain. This paper fulfils a larger knowledge gap in the arena of IO for WSC and presents the foundation for larger research projects in IO for WSC. Thus, the generic safety stock model would enable the WSCs achieve higher performance leading to competitive advantage.

show abstract

“…Much as the concentration of fiber or B vitamins is likely to differ across beer varieties, production methods and inputs vary with the quality of wine. Moreover, wine demand can change substantially based on price points (Cuellar and Huffman, 2008; Nelson, 2013). Hence, we use price per liter to categorize all wine purchases in our data as jug, table, premium, or ultrapremium 3…”

Section: Data and Statisticsmentioning

confidence: 99%

Beer-Purchasing Behavior, Dietary Quality, and Health Outcomes among U.S. Adults

et al. 2016

View full text Add to dashboard Cite

We use rich IRI household- and individual-level data sets to examine the relationships between heart disease and type 2 diabetes with alcohol consumption. We control for a wide variety of potential confounders, including diet quality and lifestyle choices. Beer has long been studied in related literature to ambiguous outcomes. We explore the role of beer consumption in detail by separating craft beer from macrobeer and imported beer. The results indicate that most alcohol types could have protective effects against heart disease and diabetes, with the strongest effects occurring for craft beer and wine. Treating beer as a single, homogenous category in health studies likely leads to measurement error. (JEL Classifications: D12, I12, R20, L66, P36)

show abstract

Estimating the Demand for Wine Using Instrumental Variable Techniques

Cited by 11 publications

References 10 publications

Modelling choice when price is a cue for quality: a case study with Chinese consumers

Modelling choice when price is a cue for quality: a case study with Chinese consumers

An Analytical Modelling Approach to Optimize Safety Stock of Winery Supply Chains (Wsc)

Beer-Purchasing Behavior, Dietary Quality, and Health Outcomes among U.S. Adults

Contact Info

Product

Resources

About