This study examines vertical coordination in an emerging Illinois wine industry. Results generally corroborate earlier findings that quality matters, as temporal issues related to grape perishability increase the probability written contracts are used to procure grapes and decrease reliance on informal agreements. Hold-up concerns related to sourcing adequate quality grapes and at risk investments winemaking equipment displace informal contracts with in-house production. Older wineries also rely more on their own vineyards, and larger ones require additional outside supplies. There is also some evidence that a few wineries outsource wine production activities to more experienced and larger wineries.
It has been a persistent phenomenon in many societies that a large proportion of alcohol consumption takes place in company of other people. While the phenomenon of social or public drinking is well discussed in disciplines as social psychology and anthropology, econo- mists have paid little attention to the social environment of alcohol consumption. This paper tries to close this gap and explains social drinking as a trust facilitating device. Since alcohol consumption tends to make some people (unwillingly) tell the truth, social drinking can eventually serve as a signaling device in social contact games.
Do well-known restaurants stand the test of time? The objective of this short paper is to review the list of the top ranked restaurants from 1974 to 2010 and examine the sustainability of the grades of these restaurants over time. A new methodology to calculate migration and default rates is presented for selected years over the period under study. It is shown that these rates are relatively stable and low compared to bankruptcy rates. After 24 years, the default rate of top ranked restaurant is only about 32%.
So maybe wine and liquor monopolies are not all bad! At least that is the conclusion that Katja Seim and Joel Waldfogel arrive at in their recent AAWE Working Paper No. 69 Economics Public Monopoly and Economic Efficiency: Evidence from the Pennsylvania Liquor Control Board’s Entry Decisions Katja Seim and Joel Waldfogel They study the…