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What determines exports of luxury products? The Case of Cognac

Author

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  • Antoine Bouet

    (Larefi - Laboratoire d'analyse et de recherche en économie et finance internationales - UB - Université de Bordeaux, GREThA - Groupe de Recherche en Economie Théorique et Appliquée - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique)

  • Charlotte Emlinger

    (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique)

  • Viola Lamani

    (Larefi - Laboratoire d'analyse et de recherche en économie et finance internationales - UB - Université de Bordeaux)

Abstract
The objective of this paper is to analyze the determinants of Cognac brandy exports. After describing the building of a unique database concerning Cognac shipments in volume and value terms to almost 120 destinations between 1967 and 2013, we use this database to construct descriptive statistics concerning the evolution of Cognac exports during nearly half a century. This database points out a decrease in the extensive margin of trade while the intensive margin has more than doubled in 46 years in volume. We also construct a database on protectionism affecting the worldwide exports of Cognac: it reveals the proliferation of prohibitions and of high specific tariffs, resulting in a highly taxed product throughout the world. We analyze the determinants of Cognac exports and base our empirical strategy on a two-step procedure with first a linear probability model to estimate the extensive margin, second Ordinary Least Squares to estimate the intensive margin of trade. Beyond results in line with the gravity literature, our most interesting conclusions are: (i) in many estimations, the extensive (respectively intensive) margin of trade is positively (respectively negatively) correlated with an appreciation of the Euro; (ii) like other luxury products, the elasticity of exports of Cognac to distance is negative, significant and relatively small while the elasticity to GDP is positive, significant and relatively large; (iii) all covariates have the expected impact on exports of Cognac except average custom duty on the intensive margin of trade. We discuss this last result and offer two potential explanations, a Veblen effect and an endogeneity of custom duty.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Antoine Bouet & Charlotte Emlinger & Viola Lamani, 2017. "What determines exports of luxury products? The Case of Cognac," Post-Print hal-02148597, HAL.
    • Handle: RePEc:hal:journl:hal-02148597
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    16. repec:hal:pseose:hal-00610947 is not listed on IDEAS
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    Cited by:

    1. Charlotte Emlinger & Viola Lamani, 2020. "International trade, quality sorting and trade costs: the case of Cognac," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 156(3), pages 579-609, August.
    2. repec:ehl:lserod:110767 is not listed on IDEAS
    3. Lara Agnoli & J. François Outreville, 2021. "Wine Consumption and Culture: A Cross‐Country Analysis," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(3), pages 1101-1124, September.
    4. Eva Bieleková & Ján Pokrivčák, 2020. "Determinants of International Beer Export," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 12(2), June.
    5. Olivier Bargain & Jean‐Marie Cardebat & Raphaël Chiappini, 2023. "Trade uncorked: Genetic distance and taste‐related barriers in wine trade," American Journal of Agricultural Economics, John Wiley & Sons, vol. 105(2), pages 674-708, March.
    6. Olivier BARGAIN & Jean-Marie CARDEBAT & Raphaël CHIAPPINI, 2020. "Trade Uncorked: Genetic Resistance and Quality Heterogeneity in Wine Exports," Bordeaux Economics Working Papers 2020-18, Bordeaux School of Economics (BSE).
    7. Macedo, Anthony & Rebelo, João & Gouveia, Sofia, 2019. "Export propensity and intensity in the wine industry: a fractional econometric approach," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 8(3), December.
    8. Wakuo Saito & Makoto Nakakita & Teruo Nakatsuma, 2024. "Comparative Analysis of Japanese Rice Wine Export Trends: Large Firms in the Nada Region vs. SMEs in Other Regions," World, MDPI, vol. 5(3), pages 1-23, August.

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    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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