Modeling winegrape prices in disequilibrium

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Abstract

This article presents an econometric model of winegrape prices which recognizes the existence of demand and supply imbalances in the Australian market. A 'markets in disequilibrium' framework is employed to motivate modeling price changes as responding to variations in excess demand/supply. The disequilibrium price equation provides estimates of regional and varietal price discounts/premiums and a measure of the speed of disequilibrium price adjustment. The equilibrium assumption is rejected for the market and substantial differences between equilibrium and disequilibrium estimates point to the inaccuracies of assuming market clearing. Disequilibrium estimates point to significant differences between warm and cool regions and changing speed of disequilibrium adjustment over time.
Original languageEnglish
Pages (from-to)97-107
Number of pages11
JournalAgricultural Economics: the journal of the International Association of Agricultural Economists
Volume34
Issue number1
DOIs
Publication statusPublished - 2006

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markets
econometric models
supply balance
Modeling
Disequilibrium

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title = "Modeling winegrape prices in disequilibrium",
abstract = "This article presents an econometric model of winegrape prices which recognizes the existence of demand and supply imbalances in the Australian market. A 'markets in disequilibrium' framework is employed to motivate modeling price changes as responding to variations in excess demand/supply. The disequilibrium price equation provides estimates of regional and varietal price discounts/premiums and a measure of the speed of disequilibrium price adjustment. The equilibrium assumption is rejected for the market and substantial differences between equilibrium and disequilibrium estimates point to the inaccuracies of assuming market clearing. Disequilibrium estimates point to significant differences between warm and cool regions and changing speed of disequilibrium adjustment over time.",
author = "Edward Oczkowski",
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AB - This article presents an econometric model of winegrape prices which recognizes the existence of demand and supply imbalances in the Australian market. A 'markets in disequilibrium' framework is employed to motivate modeling price changes as responding to variations in excess demand/supply. The disequilibrium price equation provides estimates of regional and varietal price discounts/premiums and a measure of the speed of disequilibrium price adjustment. The equilibrium assumption is rejected for the market and substantial differences between equilibrium and disequilibrium estimates point to the inaccuracies of assuming market clearing. Disequilibrium estimates point to significant differences between warm and cool regions and changing speed of disequilibrium adjustment over time.

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