Subsequent to the First World War, the French Government regulated the Champagne industry, and locked the status of protected (and excluded) grapes into the new Appellation d’Origine Contrôlée system, forever altering the incentives and output of wine producers. The paper aims to discuss these issues.
As a result, some indigenous varietals have disappeared entirely from the region – and a handful remain only in the vineyards and bottles of a few bold entrepreneurs, constituting less than 1 percent of Champagne production.
The authors assess several traditional explanations (from taste and preferences to agricultural resilience)-and dismiss them as unconvincing. Instead, the authors adopt a public choice framework of regulatory capture to explain the puzzle of thwarted entrepreneurship and consumer choice.
This paper is original.
The authors would like to thank the wine library at the University of California Davis, Betsy Carter, Benjamin Powell, participants at the 2008 and 2009 meetings of the American Association of Wine Economists, and 2014 seminar participants at Texas Tech University (Department of Agricultural Economics and Free Market Institute) for comments and insights. Special thanks to Axel Borg of the University of California Davis library for shedding light on an apparent impasse, and to Sam Heitner of Champagne USA for pointing the authos to, then deciphering, the 1927 law. Special thanks to the vintners and producers the authors interviewed during the Summer of 2008, who received the authors with such warmth and shared so much knowledge (but who prefer to remain anonymous). For theoretical research assistance, thanks to George Mount. For applied research assistance, thanks to Ben Chang and Hannah Grandy. The usual disclaimer applies.
Haight, C.E. and Wenzel, N.G. (2018), "
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