Hedonic Price Analysis: A view of the wine Industry in Kentucky Jiaji Liang,
[email protected] Selected Paper prepared for presentation at the 2018 Agricultural & Applied Economics Association Annual Meeting, Washington, D.C., August 5-August 7 Copyright 2018 by [authors]. All rights reserved. Readers may make verbatim copies of this document for non-commercial purposes by any means, provided that this copyright notice appears on all such copies. Hedonic Price Analysis: A View of the Wine Industry in Kentucky Abstract Many world-famous wine zones have been estimated through hedonic price method. Indeed, some objective attributes like grape varieties, vintage are significant in many former works. However, it is still necessary to continue to use this method to study in different regions because there are many reginal-unique attributes. Unlike most previous studies build in wine developed regions, this paper determines the local retail price influence from objective and subjective attributes of wine by estimating hedonic price functions in a wine developing region-Kentucky. Due to most local producers do not have world-wide reputation (or national reputation), it is difficult to figure the ranking effect from those wine celebrities which could be an important attribute variable to determine prices. The hedonic model need to be re-designed by those local attribute variables. The empirical result indicates wines made by single red vitis vinifera are 23.5% higher in retail price than American blend style wine. Compared to the Lexington- Frankfort area, prices of Louisville based wines are 11.8% cheaper and the price discount is 15% for West Kentucky.