Geographical Indications and the Value of Reputation - Empirical Evidence for Cafe de Marcala

More and more coffee-producing countries establish geographical indications (GIs) for their coffees. GIs are not only considered to be a useful tool for protecting an established reputation against misuse by imitators but also being a useful strategic tool to enter the growing specialty coffee market. Whereas the importance of regional reputation is quite well-documented in the empirical literature on wine, empirical evidence for regional reputational effects on coffee prices is rather scarce. Hence, the objective of the present paper is to shed light on the relevance of regional reputation in the coffee market by representing results for Honduran coffees. A hedonic pricing model based on internet auction data is presented including current quality proxied by a quality score and reputation via regional dummies. The results indicate that up to now the region Marcala, for which a Denomination of Origin was established in 2005, has not yet established such a reputation that after controlling for quality differences higher auction prices are paid for coffees coming from this region