Home Bias in Consumption:
Alessandro Olper, Daniele Curzi, Dario Gianfranco Frisio, Valentina Raimondi
Guest Editors: Giannis Karagiannis and Klaus Salhofer
Published: 01.12.2012 〉 Volume 61 (2012), Number 4, 223-234 〉 Resort: Articles
Submitted: N. A. 〉 Feedback to authors after first review: N. A. 〉 Accepted: N. A.
This paper investigates the determinants of home bias in consumption in the beer and wine markets across 15 ‘old’ member states of the European Union (EU) during the period 2000-2009. Two main results are obtained using a theory-driven gravity equation. Firstly, the home bias in beer consumption is several orders of magnitude higher than that of wine. Secondly, and interestingly, consumer preferences seem to be driving the home bias in the wine sector. In contrast, the home bias in beer is widely attributable to the home market effect, namely firms tend to localize near the consumers in order to minimize the high trade costs associated with beer exports.