A search theory model for the Buy Wine matchmaking algorithm in Tuscany.

This is a working draft. Please do not cite without permission of the author.................Abstract: Given the increasing concentration in the distribution of wine markets, the figure of export broker can have a significant role in the ex-ante contracting process over Tuscan wineries that seek to distribute to international outlets. Adopting a search theory approach, this paper aims to develop a basic model that describes the role of the Buy Wine algorithm and its intermediation function. The model contributes to understand how the quality of matches can influence the intermediaries’ bargaining power and the relative influence on wine prices. In these terms, the bargaining solution is still compatible with previous search theory (i.e. see Rubinstein and Wolinsky, 1987; Wong and Wright, 2011) and family economics (Browning et al., 2014) results, but the model provides an explanation of the influence that the different matching alternatives have on price determination. Our results show that the strategy set up by the Tuscany Region to facilitate the contact between regional producers and international buyers, guarantees a positive economic return for Tuscan wine producers. The statement of buyers’ preferences towards a seller profile and vice-versa may reduce the risk to occur into hidden information on the quality of traded good and then claim for a lower ex-ante search cost for the buyer.

Issue Date:
Apr 24 2017
Publication Type:
Conference Paper/ Presentation
Record Identifier:
Total Pages:
JEL Codes:
D23; L14; L22; L66

 Record created 2017-07-05, last modified 2018-07-25

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