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

AAWE Working Paper No. 93 – Economics

 

A Meta-Analysis of Geographical Indication Food Valuation Studies.
What Drives the Premium for Origin Based Labels?

Oana Deselnicu, Marco Costanigro, Diogo M. Souza-Monteiro
and Dawn Thilmany McFadden

Abstract

Geographical indications (GI) have become a common mean of product differentiation in food markets, and a vast number of studies have estimated the price premium captured by specific GI products. We collected 30 valuation studies conducted across the globe, compiling a total of 183 estimates of GI premia for wine, cheese, coffee, meat, produce, olive oil and grain products.
The average premium is 13.3%, with a rather large standard deviation (24.59%). We show that models accounting for product characteristics and institutional framework (PDO, PGI, trademarks) can explain a large portion of this variance. GIs capture the highest percentage premium in markets for products with short supply chains and relatively low added value (e.g. fresh produce), while premia are lower for wine and olive oil, where alternative means of product differentiation (e.g. branding) exist. Controlling for product characteristics, GIs adopting stricter regulations (PDO) yield larger premia than less regulated ones (PGI).

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