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Abstract:
Both French and Italian quality wine regulation developed as a means of creating a protected market by guaranteeing a traditional, limited-quantity product. But consumer trust in the private, government-backed mark varies significantly in France and Italy, and France manages to obtain significantly higher prices for regulated AOC wine than their Italian DOC counterparts. This article investigates the origins of divergent trust patterns as well as the relationship between trust and production strategies. My research indicates trust patterns are shaped by the structure and operation of the regulatory regime. Drawing upon extensive personal interviews, I find price differentials and trust in the regulatory mark may be explained by three factors: administrative historical legacy and government trust, trust among supply chain actors, and market structure. Higher institutionalized trust—or trust in the regulatory regime—is associated with higher quality production, higher prices, less price-based competition, and less market concentration.
