The Meta Pricing Efficiency of Producer Cooperatives Under Hedonic Product Attributes: The Case of German Wine

Abstract

High internal coordination costs may put cooperatives at a disadvantage in the production and marketing of agri‐food products with hedonic quality attributes. The efficiency of cooperatives and non‐cooperatives is therefore compared with respect to their ability to place wines on the market at prices that reflect their measurable quality attributes. The results of a stochastic metafrontier panel of 1240 wine prices from two German wine guides suggest that consumers should purchase wine from cooperatives if they are seeking a favourable relation between market prices and wine quality. In turn, members of wine cooperatives should ask themselves why non‐cooperatives are typically better at achieving higher prices for the respective quality of their wines and how they can close the price gap with non‐cooperative wineries.