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Markups, quality, and trade costs
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Chen, Natalie and Juvenal, Luciana (2022) Markups, quality, and trade costs. Journal of International Economics, 137 . 103627. doi:10.1016/j.jinteco.2022.103627 ISSN 0022-1996.
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Official URL: https://doi.org/10.1016/j.jinteco.2022.103627
Abstract
This paper examines how trade costs induced by geographic distance or bilateral tariffs impact the markups of exports differentiated by quality. It relies on a data set that combines Argentinean firm-level wine exports with experts’ wine ratings as a measure of quality. Exporters price discriminate across destinations by raising markups in more distant markets, and by lowering them in high-tariff countries. However, the response of markups to changes in trade costs is heterogeneous and weaker for higher quality exports. These empirical patterns can be predicted by trade models featuring demand functions more convex than log-concave, but less than superconvex. They demonstrate that the variation in firm-level export unit values across markets is not only driven by quality differences but also by markup variation conditional on quality.
Item Type: | Journal Article | |||||||||||||||
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Subjects: | H Social Sciences > HF Commerce | |||||||||||||||
Divisions: | Faculty of Social Sciences > Economics | |||||||||||||||
Library of Congress Subject Headings (LCSH): | Retail trade -- Costs, International trade -- Costs, Markup, Tariff | |||||||||||||||
Journal or Publication Title: | Journal of International Economics | |||||||||||||||
Publisher: | Elsevier | |||||||||||||||
ISSN: | 0022-1996 | |||||||||||||||
Official Date: | July 2022 | |||||||||||||||
Dates: |
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Volume: | 137 | |||||||||||||||
Article Number: | 103627 | |||||||||||||||
DOI: | 10.1016/j.jinteco.2022.103627 | |||||||||||||||
Status: | Peer Reviewed | |||||||||||||||
Publication Status: | Published | |||||||||||||||
Access rights to Published version: | Open Access (Creative Commons) | |||||||||||||||
Date of first compliant deposit: | 16 May 2022 | |||||||||||||||
Date of first compliant Open Access: | 6 June 2022 | |||||||||||||||
RIOXX Funder/Project Grant: |
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