Price Hedonics of Beers: Effects of Alcohol Content, Quality Rating, and Production Country

Abstract

Abstract We examine the association between beer prices and the inherent characteristics of beers within the traditional price hedonic framework. Using a large-scale Norwegian data set with more than 9000 individual beer products from several production countries, we find that alcohol content has a strong, positive, and significant effect on the retail price of beer. In contrast, the effect of expert quality rating on beer price appears to be of only small to moderate importance. We also find significant and substantially important price differences between production countries. Finally, there is effect heterogeneity (i.e. interaction effects) for both alcohol content and quality rating with respect to production country. For example, the association between alcohol content and price is larger in Norway and Germany than in most of the other production countries in the data.