HOME BIAS IN CONSUMPTION : A COMPARISON BETWEEN WINE AND BEER

This paper investigates the determinants of home bias in consumption in the beer and wine markets across the EU 15 ‘old’ member states, over the period 2000-2009. Using a theory-driven gravity model we reach two main results. First, the home bias in beer consumption is by several orders of magnitude higher than that of wine. Second, and interesting, in the wine sector the home bias seems to be largely driven by the role of preferences. Differently, the home bias in beer is widely attributable to the home market effect, due to firms’ localization choices.