Preference Shifts, Structural Breaks and the Domestic Demand for Chilean Wine
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Preference Shifts, Structural Breaks
and the Domestic Demand for Chilean Wine
Cristián Troncoso-Valverde1
Abstract – This paper investigates possible changes in Chilean domestic
consumer preferences for wine through the estimation of a demand function
that allows for structural breaks and regime shifts in the cointegrating
relationship. Our findings support both higher own–price elasticity and
higher substitutability between wine and beer after 1982, when a shift in
regime in the demand function is found. We believe our findings might
be due to the introduction of an increasing number of wine varieties in
Chile during the last two decades. We argue that more wine varieties
affect domestic consumer preferences by altering the product diversity
available in the domestic market.