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The effects of knowledge spillovers and vineyard proximity on winery clustering

Published online by Cambridge University Press:  18 November 2022

Eric Stuen Open the ORCID record for Eric Stuen [Opens in a new window] ,
Haifeng Liao  and
Jon Miller
Eric Stuen*
Affiliation:
Department of Business, University of Idaho, 875 Perimeter Dr., MS 3161, Moscow, ID, 83844
Haifeng Liao
Affiliation:
Department of Geography and Geological Sciences, University of Idaho, 875 Perimeter Dr., MS 3021, Moscow, ID, 83843
Jon Miller
Affiliation:
Department of Business, University of Idaho, 875 Perimeter Dr., MS 3161, Moscow, ID, 83844
*
Corresponding author: Eric Stuen, email: estuen@uidaho.edu
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Abstract

We study the effect of proximity to other wineries on the formation of new wineries and how this effect depends on winemaking history in a location. Clustering is common in the wine industry, but it also depends on other factors, such as proximity to vineyards and high-reputation wineries. Using panel data with annual observations from 1994 to 2014 on 598 zip codes within Washington State, we estimate empirical models that control for proximity to wineries, proximity to vines, proximity to income, and the presence of star wineries. We find that the elasticity of the number of wineries with respect to proximity to wineries outside the zip code hinges on the length of local winemaking history. For locations with 11 or more winery years prior to our sample, the elasticity is at least 0.44. The presence of elite wineries is also found to have an effect, with about 0.5 additional wineries per year starting in a zip code per star winery. The effect of history suggests that policies to seed winery start-ups will help cluster formation, but only with a substantial critical mass of winemaking activity.

Keywords

clustersknowledge networkknowledge spilloverswine industryO1O18O33R11
Type
Article
Information
Journal of Wine Economics , Volume 17 , Issue 3 , August 2022 , pp. 241 - 256
Copyright
Copyright © The Author(s), 2022. Published by Cambridge University Press on behalf of American Association of Wine Economists

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