Rent-Seeking and Decline in the French Wine Industry

The judgment of Paris, in which California wines first surpassed the French in a blind tasting, shook the world in 1976. But it was not until 2003 that New World wines outpaced French exports. Demand-side factors affect French wine; however, the supply side is more intriguing. France's regulatory environment can be sustained only through monopolistic rentseeking and taxpayer subsidies. In keeping with the transitional gains trap literature, rents appear to have been exhausted; while some segments of the French wine industry would benefit from the ability to innovate, much of the industry would likely collapse without the current framework.