Hostname: page-component-cd9895bd7-fscjk Total loading time: 0 Render date: 2024-12-26T22:02:50.058Z Has data issue: false hasContentIssue false
  • English
  • Français

What Determines Exports of Luxury Products? The Case of Cognac*

Published online by Cambridge University Press:  19 May 2017

Antoine Bouët ,
Charlotte Emlinger  and
Viola Lamani
Antoine Bouët*
Affiliation:
GREThA, Department of Economics, University of Bordeaux, Avenue Léon Duguit, 33608 Pessac cedex, France; and International Food Policy Research Institute (IFPRI), 2033 K St, NW, Washington, DC 20006-1002
Charlotte Emlinger
Affiliation:
Centre d’Études Prospectives et d'Informations Internationales (CEPII), 113 rue de Grenelle, 75007 Paris, France; email: [email protected].
Viola Lamani
Affiliation:
GREThA, Department of Economics, University of Bordeaux, Avenue Léon Duguit, 33608 Pessac cedex, France; e-mail: [email protected].
*
e-mail: [email protected] (corresponding author).
Get access Rights & Permissions [Opens in a new window]

Abstract

This paper analyzes the determinants of Cognac brandy exports using a unique database on Cognac shipments to more than 140 destinations between 1996 and 2013. We use this database to construct descriptive statistics concerning the evolution of Cognac exports during this period. We also construct a database of protectionist policies that affect worldwide Cognac exports. We analyze the determinants of Cognac exports and base our empirical strategy on Heckman's (1979) procedure. We estimate successively the impact of geographical, demand and policy factors on the extensive margin of trade and the intensive margin of trade. We also control for the possibility of an endogeneity bias on the probability of trade. We show that i) as with other luxury products, the elasticity of Cognac exports to distance is negative, significant, and relatively small, while the elasticity to gross domestic product (GDP) is positive, significant, and relatively large; and ii) average customs duties do not have a significant impact on the intensive margin but significantly and positively affect the probability of trade. We discuss this last result and correct the endogeneity bias using tax revenues of importing countries in percentage of GDP as an instrument. (JEL Classifications: F10, F14)

Keywords

international tradeluxury productsgravity equationCognac
Type
Articles
Information
Journal of Wine Economics , Volume 12 , Issue 1 , February 2017 , pp. 37 - 58
Copyright
Copyright © American Association of Wine Economists 2017 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

*

We thank two anonymous referees and participants in a LAREFI seminar (November 12, 2015), a MAD conference in Bordeaux (November 19–20, 2015), and an IATRC conference in Clearwater (December 13–15, 2015) for their helpful comments and suggestions, in particular Jason Brent, Jean-Marie Cardebat, Anne-Célia Disdier, Sébastien Jean, and Dominique Van der Mensbrugghe. All errors are ours.

References

Anderson, J.E., and van Wincoop, E. (2003). Gravity with gravitas: A solution to the border puzzle. American Economic Review, 93(1), 170–192.Google Scholar
Baldwin, R., and Harrigan, J. (2011). Zeros, quality, and space: Trade theory and trade evidence. American Economic Journal: Microeconomics, 3(2), 60–88.Google Scholar
Chaney, T. (2013). Liquidity constrained exporters. NBER Working Paper No. 19170.Google Scholar
Choi, Y.C., Hummels, D., and Xiang, C. (2009). Explaining import quality: The role of the income distribution. Journal of International Economics, 78(2), 293–303.Google Scholar
Crozet, M., Head, K., and Mayer, T. (2012). Quality sorting and trade: Firm-level evidence for French wine. Review of Economic Studies, 79(2), 609–644.Google Scholar
Dal Bianco, A., Boatto, V.L., Caracciolo, F., and Santeramo, F.G. (2016). Tariffs and non-tariff frictions in the world wine trade. European Review of Agricultural Economics, 43(1), 31–57.Google Scholar
Eaton, J., and Kortum, S. (2001). Trade in capital goods. European Economic Review, 45(7), 1195–1235.Google Scholar
Fajgelbaum, P., Grossman, G.M., and Helpman, E. (2011). Income distribution, product quality, and international trade. Journal of Political Economy, 119(4), 721–765.Google Scholar
Flam, H., and Helpman, E. (1987). Vertical product differentiation and north-south trade. American Economic Review, 77(5), 810–822.Google Scholar
Fogarty, J. (2010). The demand for beer, wine and spirits: A survey of the literature. Journal of Economic Surveys, 24(3), 428–478.CrossRefGoogle Scholar
Fontagné, L., and Hatte, S. (2013). European high-end products in international competition. Paris School of Economics Working Paper No. 37.Google Scholar
Gleditsch, N.P., Wallensteen, P., Eriksson, M., Sollenberg, M., and Strand, H. (2002). Armed conflict 1946–2001: A new dataset. Journal of Peace Research, 39(5), 615–637.CrossRefGoogle Scholar
Hallak, J.C. (2006). Product quality and the direction of trade. Journal of International Economics, 68(1), 238–265.Google Scholar
Head, K., and Mayer, T. (2014). Gravity equations: Workhorse, toolkit and cookbook. In Gopinath, G.; Helpman, E.; and Rogoff, K. (Eds.), Handbook of International Economics. Vol. 4. Amsterdam: Elsevier, 131–195.Google Scholar
Heckman, J.J. (1979). Sample selection bias as a specification error. Econometrica, 47(1), 153–161.Google Scholar
Helpman, E., Melitz, M., and Rubinstein, Y. (2008). Estimating trade flows: Trading partners and trading volumes. Quarterly Journal of Economics, 123(2), 441–487.CrossRefGoogle Scholar
Hummels, D., and Klenow, P. (2005). The variety and quality of a nation's exports. American Economic Review, 95(3), 704–723.CrossRefGoogle Scholar
Johnson, R.C. (2012). Trade and prices with heterogeneous firms. Journal of International Economics, 86(1), 43–56.Google Scholar
Manova, K., and Zhang, Z. (2012). Export prices across firms and destinations. Quarterly Journal of Economics, 127(1), 379–436.Google Scholar
Martin, J., and Mayneris, F. (2015). High-end variety exporters defying gravity: Micro facts and aggregate implications. Journal of International Economics, 96(1), 55–71.Google Scholar
Matsuyama, K. (2000). A Ricardian model with a continuum of goods under nonhomothetic preferences: Demand complementarities, income distribution, and north-south trade. Journal of Political Economy, 108(6), 1093–1120.Google Scholar
Melitz, M.J. (2003). The Impact of trade on intra-industry reallocations and aggregate industry productivity. Econometrica, 71(6), 1695–1725.Google Scholar
Nelson, J.P. (2013). Robust demand elasticities for wine and distilled spirits: Meta-analysis with correction for outliers and publication bias. Journal of Wine Economics, 8(3), 294–317.Google Scholar
Pettersson, T., and Wallensteen, P. (2015). Armed conflict, 1946–2014. Journal of Peace Research, 52(4), 536–550.Google Scholar
Raimondi, V., and Olper, A. (2011). Trade elasticity, gravity and trade liberalisation: Evidence from the food industry. Journal of Agricultural Economics, 62(3), 525–550.Google Scholar