Considering wines from the well-known Bordeaux region of France. The wine is first sold as "primeur" several months after the harvest, then, almost a year the wine is eventually sold as "bottled" wine. It is estimated by Ali and Nauges(2007) that a 10% increase in the primeur price raises the subsequent prices of bottled wine by 3%. They conclude that the primeur price adts as a quality signal for consumers. Linking to the signalling channels discussed in class, which of the following statement is NOT true?
A.
The primeur price can signal the quality of bottled wine because such a price is a sacrefice that the low quality producer cannot bear if consumers purchase wine repeatedly.
B.
The primeur price can signal the quality of bottled wine because in wine market, there are sufficiently high share of informed consumers and producers with low quality wine would suffer a loss if they were mimicking the high primeur price.
C.
The primeur price can signal the quality of bottled wine because it is more costly to produce high-quality than low quality wine and an extremely high primeur price leads to small demand that prevent the low quality inefficient producer from mimicking.
D.
The uninformed consumers can also form quality expectations using information other than the primeur price, e.g. the climatic conditions, reputation of producer, etc.