Status, Quality, and Social Order in the California Wine Industry

TLDR

The study investigates how a winery’s market status shapes its product‑quality decisions and the resulting outcomes, testing complementary effects of status and reputation through analysis of over 10,000 affiliation choices by 595 wineries. The authors compare reputation‑based economic models that use past quality as information with sociological status models that focus on affiliations, and evaluate these through the affiliation‑decision data. High‑status wineries reap larger benefits from subsequent high‑status affiliations, are more willing and able to pay for them, and use them to further advance their position in the industry hierarchy.

Abstract

This paper examines how a producer's status in the market influences its choices about product quality, and the outcomes that result. We compare economic models of reputation that emphasize the role of past quality as a source of information about current quality with sociological models of status that emphasize the role of affiliations. We test hypotheses about the complementary effects of status and reputation in an analysis of more than 10,000 affiliation decisions made by 595 wineries over a 10-year period. Results show that actors occupying high-status positions obtain greater benefit from subsequent high-status affiliations than do actors occupying low-status positions. As such, these actors are more willing and able to pay for subsequent high-status affiliations and to use them to advance their position in the larger status ordering.