Geographical Indications and International Trade. Evidence from the wine market.

The objective of this paper is to evaluate the role of the Appellation of Origin (AO) system on the international wine market, given I) the GIs international legal protection system, II) the main aspects of the evolution of the world wine demand and III) the strategic choices of firms on the international market. On the demand side, through descriptive statistics and economic literature review, we show the increasing wine consumers’ appreciation of reputation and origin attributes. On the supply side, we identify the main quality strategies implemented on the international wine market and show the more and more important role played by origin attributes in the strategic choices made by firms worldwide. Finally, a direct survey on Italian Appellations of Origin concerning the registration on the international market shows an increasing risk of an imperfect use of geographical place names. The main consequences are identified for both producers and consumers. Firstly, a misperception of product quality attributes can arise and menace the effectiveness of AO as informative tool. Secondly, the free riding phenomenon may arise and affect the AO collective reputation with a consequently demand drop in the long term.