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

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AAWE Working Paper No. 172 – Economics

AAWE Working Paper No. 172 – Economics

From nuclear power to food safety, many regulations mandate that government employees inspect economic entities on a regular basis. Such an inspection introduces a classical double-moral-hazard problem: on the inspector side, government employed inspectors may not detect or report every violation as the principal desires; on the inspectee side, regulated firms may not comply with every rule set by the principal; their degree of compliance depends on the inspector’s ability to detect violations and the subsequent punishment for reported violations. Many a suggestions have been made to alleviate the inspector moral hazard, including outcome-based contracts,1 targeted auditing, reduction of information rents, high penalties for corrupt inspectors, or intentional selection of biased employees.2 However, these “optimal” solutions – often made in a theoretical framework – are difficult to implement in reality because bureaucratic agencies are subject to rigid compensation schemes and limited resources.

AAWE Working Paper No. 171 – Economics

AAWE Working Paper No. 171 – Economics

Firms are inspected on a regular basis when their products or production processes involve potential environmental, public health, or safety hazards. However, little is known of the effectiveness of such inspections, mainly because inspection outcomes, which are often reported in terms of the number of violations, reflect both detection and compliance. While efforts to detect violations are costly, this detection is never perfect, and separating detection from compliance poses a real empirical challenge. In this article, we overcome this problem by exploiting a change in detection technology for restaurant hygiene inspections in Florida.

AAWE Working Paper No. 170 – Economics

AAWE Working Paper No. 170 – Economics

Australia’s rate of wine consumer taxation was shown by Berger and Anderson (1999) to be high by OECD standards at that time, and especially by the standards of significant wine producing/exporting countries. That was also true when those numbers were updated to 2008 by Anderson (2010). Australia’s type of wine tax is unusual in being ad valorem (a percentage of the wholesale price) rather than specific (in cents per litre of alcohol), however, so the comparison depends on what price level is the focus of attention.

AAWE Working Paper No. 169 – Economics

AAWE Working Paper No. 169 – Economics

We study the structure and performance of the coffee export sector in Ethiopia, Africa’s most important coffee producer, over the period 2003 to 2013. We find an evolving policy environment leading to structural changes in the export sector, including an elimination of vertical integration for most exporters. Ethiopia’s coffee export earnings improved dramatically over this period, i.e. a four-fold real increase. This has mostly been due to increases in international market prices. Quality improved only slightly over time, but the quantity exported increased by 50 percent, seemingly explained by increased domestic supplies as well as reduced local consumption. To further improve export performance, investments to increase the quantities produced and to improve quality are needed, including an increase in washing, certification, and traceability, as these characteristics are shown to be associated with significant quality premi- ums in international markets.

24 million Americans consume 74 alcoholic drinks per week?

The top 10 percent of American drinkers – 24 million adults over age 18 – consume, on average, 74 alcoholic drinks per week. Remember, 1 drink is defined as about 150ml of wine (12%), 340ml of beer (5%) or 43ml of liquor (40%). — Hard to believe that 10% of all American over 18 consume…

The Rise and Fall of an American Beer Glas: the Shaker Pint

The Rise and Fall of an American Beer Glas: the Shaker Pint: www.citylab.com

AAWE Working Paper No. 168 – Business

AAWE Working Paper No. 168 – Business

This paper explores recent developments in outward Foreign Direct Investment (OFDI) from Chinese companies in the wine sector in the Bordeaux (France) and West Australia (WA) regions. The objective is to explore the extent of the phenomenon, which although widely mediatized, has not been the subject of academic scrutiny. As OFDI official figures provide little detail, we undertook primary research in the two regions, in addition to analysis of secondary trade data.
Results indicate that the level of Chinese OFDI is relatively low, although the number and speed of acquisitions, especially in Bordeaux, has attracted attention. The motivations of investors in both regions were: the exploitation of growth in the home market; security of supply; prestige and diversification of risk. In Bordeaux the ‘appellation’ was a clear motivation, as were the vineyards’ historic buildings. A final motivating factor was the wish to avoid the complex supply chains in Bordeaux, by bringing wine direct to the Chinese market. In Australia, cementing existing business relationships, as well as access to Australian residency were specific motivations. Both regions have a relatively open investment climate and no significant investment barriers were noted, although the potential exists, especially as evidence emerges of illegal funding of some investments. We conclude with some directions for future research.

AAWE Working Paper No. 167 – Economics

AAWE Working Paper No. 167 – Economics

This working paper provides a compilation of statistics on international wine consumption, production and trade from the mid-nineteenth century until the beginning of the Second World War. The statistical data is structured in three parts dealing with consumption, production and trade both at the world level and for a broad sample of countries. The data presented for Spain, France and Italy, the leading three nations in the wine market, are especially wide-ranging.

AAWE Working Paper No. 166 – Business

AAWE Working Paper No. 166 – Business

Argentinean wineries experienced a tremendous 4-­‐time growth in their export value between 2000 and 2012, while for the same period the average rise of world wine exports was around 70%. Today, Argentina is the 9th biggest wine exporter in the world. The country has succeeded in building ”king of Malbec” notoriety and many of its wines rank as best sellers in foreign markets. This impressive growth is the result of the winning strategies wineries implemented years ago. Indeed, in the late 90’s the industry changed its model to focus on the production of quality wines and the development of foreign markets. New marketing and communication tools were created and have strongly contributed to wineries ́ success. Two decades later, new challenges for this quality model appear. On the one hand, wineries ́ margins are threatened by high inflation in Argentina. On the other hand, higher buyers ́ concentration in foreign markets defines wineries ́ reduced bargaining power. A descriptive analysis, based on Argentina Customs Office data, was carried out to understand last years ́ performance and identify possible trends. Grape varieties, vintages, price, marketplaces and bottle sizes are described. Main differences between foreign markets are pointed out. Four different categories of wineries are described based on their export volume. Their specific strategies in terms of price segment are assessed allowing an identification of their different profiles. Results show the price upgrading strategy of the Argentinean industry. Cheap wines have traded up towards premium category as the only way to deal with inflation pressures. Whereas some expensive wine have traded down towards premium category in an attempt to conquer consumers threatened by the ongoing economic crisis.

AAWE Working Paper No. 165 – Economics

AAWE Working Paper No. 165 – Economics

Marketing and packaging are substantial expenditures in many consumer products industries. We look at one such industry, mass-market lager beer, and show that when consumers taste blind, they cannot distinguish between three major competing beer brands. Our results suggest that brand loyalty in this market is likely to be driven largely by marketing and packaging, and not by the underlying sensory properties of the competing products.

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