Agent-Based Modelling of Viticulture Development in Emerging Markets: The Case of the Małopolska Region

Abstract

In this paper, we apply an agent-based approach to explain both the final state and the dynamics of the development process of the wine sector in the MaA‚opolska region in Poland. This sector has been affected by various environmental, institutional, behavioural and social factors and has undergone evolutionary changes in recent years. The econometric analysis of empirical data of vineyards in this region provides insights into the degree of influence of various factors under consideration on the aggregate number of vineyards in sub-regions. However, this does no explain the dynamics of the local formation of new vineyards or the underlying latent attitudes of vineyard owners. To overcome this limitation, we developed an agent-based model with heterogeneous agents (regular farms as well as large and small vineyards), which allowed us to identify a two-stage development scenario: i) community building and ii) vineyard creation. Our findings are of two types. Firstly, we showed a case where the agent-based model has good predictive power, in situations where the econometric model fails. Secondly, estimation of the agent-based model parameters and sensitivity analysis revealed crucial factors that have driven development of viticulture in the MaA‚opolska region. In particular, we find that the crucial element underlying the good predictive power of the model is that it enables us to capture the fact that wine enthusiasts initially concentrate in sub-regions with more benign environmental conditions. Next, when one of them eventually established a vineyard, agents in the community had a lowered barrier to entry via the possibility of practical knowledge exchange, joint marketing efforts or vineyard maintenance resource sharing. This is in line with current evidence, which shows strong clustering effects, namely, a relatively large number of vineyards originate at relatively similar times and locations.