AAWE, Economics Dept, New York University, 19 W 4th St, 6Fl., New York NY 10012aawe@wine-economics.org

AAWE Working Paper No. 49 – Economics

 

The Economics of Nested Names:
Name Specificity, Reputations, and Price Premia

Marco Costanigro, Jill J. McCluskey and Christopher Goemans 

Abstract

We study how reputation price premia are obtained in markets for experience goods and how they are associated with names identifying products with increasing specificity (nested names), such as region-of- origin, brand and product names. A model of price variation as a function of historical quality performance is estimated via quantile regression. Findings include that multiple factors, in addition to past average quality, influence the magnitude of the premia. These premia migrate from aggregate names to more specific ones as the consequences of experiencing poor quality overcome the cost of forming detailed quality expectations. The application is the California wine industry.

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