Portuguese olive oil and the price of regional products : does designation of origin really matter?

Abstract

Resources (tangible and intangible) can be mobilised to increase region’s reputation and confer a competitive advantage to certain products with origin in that region. The returns of a region’s resources depend upon the ability of local firms to appropriate the rents earned and whether the consumers value the characteristics of the region that are associated with the product, being disposed to pay a price premium. The results we got through the estimation of a hedonic price function, which relates the price of portuguese regional olive oil to its various attributes, provided empirical support to this idea. The study shows that designation of origin, producer’s brand and olive oil characteristics (biological and mixed with herbs) have strong impact on price. Specifically, olive oil from regions of “Trás-os-Montes e Alto Douro”, “Beiras e Ribatejo” and “Alentejo” are expected to have price premiums relative to other olive oil without region indication (base category). It also allows to conclude that olive oil acidity has a negative impact on price.