conservation, characterisation and management of grapevine genetic

The DM adaptation of LA/EASI consists of incorporating attribute distance variables, δ D into
the model. Let Z D be an indicator variable such that z D jl = 1 if product j shows characteristic l; 0
otherwise 1 , so that δ D :
δ D jk = 1 if |z D jl - z D kl| = 0; 1 otherwise (11)
Using the attribute distance variables, cross-price terms in the LA/EASI are reformulated as
follows:
(12)
Where λ is a parameter to be estimated. Following the work of Pinkse and Slade (2004), Rojas
(2008), Rojas and Peterson (2008) and Bonanno (2009), brand intercepts are interacted with own
price elements, intercept and expenditure coefficients. In this way, only one equation can be
estimated with the result of a considerable reduction of parameters and equations to be
estimated 2 .
3.3 Data and Estimation
The data employed are drawn from the ACNielsen Italian HomeScan panel. The particular
sample of 6,701 households includes unit prices and quantities purchased weekly of all types of
wine over the two-year period from December 2002 to December 2004. Purchases of wine away
from home are not included. Time invariant socio-demographic variables for each household are
also included with the panel on wine purchases.
The approach adopted allows exploiting the panel nature of the data. In fact, our data
present more than 32,000 observation concerning wine sold in bottles of 0.75 liter purchases. On
the other hand, the panel is highly unbalanced due to not all households purchasing each week.
Attributes considered are 4 brands corresponding to those owning the larger market share and
producing also organic wine, color, GI or table wine, organic. Foreign wine and a last category
including the rest of the market have also been considered. The resulting combinations are 48
products or market combinations.
Equation (11) has been estimated by Minimum Distance estimator using cost variables taken
from ISTAT tables, to account for the endogeneity. The variables used as instrument: farm level
grape price and farm level wine price, labor and energy cost indexes.
4. RESULTS
Given the specification in eq. (11) wine attributes include: brand, color, GI and Organic
dummies and distance parameters. Socio-demographic shifters were also considered in the model.
1 Continuous attributes could also be included in the model by applying the Euclidean distance metric as
indicated in Rojas (2008) and Bonanno (2009). In this paper, on the other hand, quality attributes are considered to
be discrete
2 A limitation of this approach is the fact that Engel curves flexibility is restricted to linearity because only one
equation is estimated, while EASI demand systems allow Engel relationships to be polynomial of order 1 less the
number of equations (Pendakur, 2008).