engleski

Wine with gravity: sparkling vs still wine

Since its introduction by Jan Tinbergen in the late 1960s, the gravity model has become one of the most widely used models in empirical international trade analysis. The object of research in this paper is the wine trade due to the many changes it has faced in the last two decades, such as the globalization of the wine market and the increased competitiveness caused by the emergence of the "New World countries" in the world wine market. The aim of this paper is to use this proven model to answer some new questions: What are the differences between sparkling wine and still wine with respect to the variables of the gravity model and what are the explanations for these differences. In our paper, we quantify answers to these questions by developing augmented gravity model that includes a set of standard gravity model variables, such as gross domestic products of trading partners and bilateral distance, contiguity, as well as additional variables such as regional trade agreements (RTA), cultural "proximity" represented with a dummy for common/similar language, and historical relations represented with colonial ties. Using the Poisson Pseudo- Maximum Likelihood Estimator, we estimate different versions of gravity models for both exports and imports. The results show that RTA, historical ties and cultural proximity have different effects on trade in sparkling wine compared to trade in still wine. In the paper, we explain the reasons for these differences.

gravity model ; sparkling wine ; still wine ; wine trade ; wine imports ; wine exports

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