Towards a Differentiated Modelling of Origin Effects in Hedonic Analysis:An Application to Auction Prices of Specialty Coffee

Ramona Teuber and Roland Herrmann

No 126235, 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil from International Association of Agricultural Economists

Abstract: Origin matters. This has been shown by numerous studies using either discrete choice or hedonic approaches to derive implicit prices for origin as a product attribute. In most of the hedonic studies, intercept dummies were introduced for specific regional origins and statistically significant coefficients of those variables were seen as an indication of either a superior or inferior reputation compared to products from other origins. We argue that hedonic pricing models of this type may be too simple to detect the true origin effects if assessments of a product’s sensory quality are available and interact with prior beliefs on reputation. Based on a supply-and-demand framework to explain auction prices, a reduced-form hedonic pricing model is suggested that includes intercept- as well as slope-dummy effects of the regional origin. As reputation and the objective product quality are particularly important on markets of differentiated, high-quality foods and beverages we analyze auction markets of specialty coffees. The findings for the Cup-of-Excellence data reveal that it is important to distinguish reputation, sensory quality and their interaction as determinants of coffee auction prices as well as varying origin impacts across market segments.

Keywords: Demand and Price Analysis; Industrial Organization; International Relations/Trade; Marketing; Research Methods/ Statistical Methods (search for similar items in EconPapers)
Pages: 22
Date: 2012
New Economics Papers: this item is included in nep-agr
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Journal Article: Towards a differentiated modeling of origin effects in hedonic analysis: An application to auction prices of specialty coffee (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:iaae12:126235

DOI: 10.22004/ag.econ.126235

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