Revista de Economia e Sociologia Rural
https://revistasober.org/article/doi/10.1590/S0103-20032004000300005
Revista de Economia e Sociologia Rural
Research article

Preference shifts, structural breaks and the domestic demand for Chilean wine

Cristián Troncoso-Valverde

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Abstract

This paper investigates possible changes in Chilean domestic consumer preferences for wine through the estimation of a demand function that allows for structural breaks and regime shifts in the cointegrating relationship. Our findings support both higher own–price elasticity and higher substitutability between wine and beer after 1982, when a shift in regime in the demand function is found. We believe our findings might be due to the introduction of an increasing number of wine varieties in Chile during the last two decades. We argue that more wine varieties affect domestic consumer preferences by altering the product diversity available in the domestic market.

Keywords

Preference shifts, wine demand, structural breaks, product diversity
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