Does terroir size matter? Protected geographical areas and prices of European hams

Abstract

The boundaries of geographical indication (GI) areas represent the core of GI specifications. Theory suggests that smaller areas result in higher prices due to quantity restrictions and higher quality. However, empirical evidence on the importance of GI areas for using places as brands is scarce. Our regressions using newly coded data of GI areas in km2 of 22 hams provide direct empirical evidence that larger areas are associated with lower prices. Subsample regressions suggest that areas affect prices through both quantity and (perceived) quality. Thus, our findings indicate that GI areas are a non-negligible factor in establishing collective regional brands.