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The Price You Pay: Price-setting as a Response to Norm Violations in the Market for Champagne Grapes

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Contrary to the general view that markets are shaped by economic forces, bargaining
power, and the prior relationships between exchange partners, this
paper posits that markets can sometimes also be purely socially constructed,
in the sense that prices can vary irrespective of the economic value
embedded in the exchange. Building on insights from the literature on categories,
we argue that sellers may react to violations of local norms on the
part of particular buyers by charging them higher prices. Sellers thus provide
economic benefits, in the form of lower prices, to buyers who closely adhere
to the category’s norms. We test these ideas using data on the market for
Champagne grapes, examining the exchange between grape growers (the
sellers) and the 66 houses that make the sparkling wine (the buyers).
Interviews and survey data informed us that growers have clear, normative
ideas about what a Champagne house should look like and do: houses that
are no longer headed by a descendant of the founder, are not located in one
of the traditional Champagne villages, are relative newcomers to the industry,
are part of a corporate group, supply supermarket brands, operate winemaking
subsidiaries abroad, or acquire their own vineyards are all viewed in a
negative light. Our models provide strong support for our prediction, showing
that the prices different organizations are charged for their purchases depend
substantially on whether they meet local expectations for who they are and
what they do. Our qualitative evidence confirms that this differential pricing
by growers occurs not through collusion but through a spontaneous, bottomup
process.

Keywords: price-setting, categories, norm violations, Champagne industry

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Informasi Detail

Judul Seri

Administrative Science Quarterly

No. Panggil

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Penerbit

Oxford : SAGE/JOHNSON UNIVERSITY., 2014

Deskripsi Fisik

Administrative Science Quarterly 59 (1)109–144

Bahasa

English

ISBN/ISSN

DOI: 10.1177/0001839

Klasifikasi

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Tipe Isi

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Tipe Media

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Tipe Pembawa

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Edisi

59 (1)

Subjek

ADMINISTRASI PUBLIK

Info Detail Spesifik

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Pernyataan Tanggungjawab

agus

Versi lain/terkait

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