winepriceslectureven198

winepriceslectureven198 - Hedonic Price Analysis of...

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Hedonic Price Analysis of California Wine Daniel Sumner and Hyunok Lee Wine Management, Markets and Economics April 22, 2009
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Statistical Analysis of wine prices Generally P it = a + bA it + cV it + dS it + fAGE it + e it This linear regression specification helps us appreciate the difference between differences in average prices by wine characteristic and the marginal relationship, holding other factors fixed.
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Approach used in the study Unlike previous hedonic wine price models which use sets of dummy variables to represent grouping characteristics, we use a random intercept model, which is more general in terms model restrictions than the fixed effect dummy variable approach. In the specification of random intercepts, we focused on three grouping factors as random intercepts, appellation of origin, grape variety, and vintage year. Each grouping factor has the following clusters: Appellation: 63 appellations including 51 AVAs, 11 county appellations, 1 state appellation. Our data include 51 out of 85 AVAs available in 2001 (we dropped the observations when their appellations are represented by less than 6 obs.). Grape variety: 5 varieties, Cab. Sauv. Chardonnay, Pinot noir,
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This note was uploaded on 09/29/2010 for the course VEN 101C 91861 taught by Professor Davidsmart during the Spring '09 term at UC Davis.

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winepriceslectureven198 - Hedonic Price Analysis of...

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