The Information Value of Geographical Indications

Abstract

We conduct laboratory experiments in Spain (N = 148) and France (N = 143) simulating a wine shopping experience in which participants choose between four wines in a limited information environment, and access to Geographical Indication (GI) information, winery names, and expert review scores are “purchased” in multiple price listing elicitation sessions. Data analysis leverages the sequential nature of the rounds, experimental treatments, and a wine knowledge questionnaire to investigate the hierarchical structure and level of redundancy between alternative information sources, the role played by wine prices, and previously acquired expertise. We estimate that the average value of accessing GI information in a pre-purchase scenario lies between EUR 0.33 (Spain) and EUR 0.37 (France) for each purchasing occasion, and expert reviews provide a similar level of information. These findings are consistent across different price segments (high: €13-€17 vs. low: €4-€7). Firm names have lower average valuation but are more useful to high-knowledge consumers. GIs, firm names, and expert reviews are found to be imperfect substitutes, suggesting that GIs capture elements of both horizontal and vertical differentiation. The discussion is structured along three main thematic areas of contribution: the role of GIs as signals of quality, the extant literature studying how consumers interpret quality signals, and the contrast between our findings and the modeling assumption adopted in the GI theoretical literature.