Essays on Product Quality Differentiation and International Trade PDF Download
Are you looking for read ebook online? Search for your book and save it on your Kindle device, PC, phones or tablets. Download Essays on Product Quality Differentiation and International Trade PDF full book. Access full book title Essays on Product Quality Differentiation and International Trade by Yo Chul Choi. Download full books in PDF and EPUB format.
Author: Yo Chul Choi
Publisher:
ISBN:
Category :
Languages : en
Pages : 104
Get Book Here
Book Description
Essay one examines whether a generalized version of Flam and Helpman's (1987) model of vertical differentiation can reconcile three facts. One, countries import only a subset of available varieties. Two, import prices vary across exporters within narrow product categories. Three, US growth in both import variety and import price dispersion has occurred at the same time that the US income distribution has significantly widened. The generalized model maps cross-country differences in income distributions to variation in import variety and price variation. The theoretical predictions are examined and confirmed using panel data on import variety and prices, and detailed income distribution data from the Luxembourg Income Survey. Country pairs whose income distributions are growing more similar over time have growing similarity in the distribution of their import prices, and in the number of common export sources from which they buy. Essay two investigates the theoretical relationship between factor abundance and within-product specialization. To address the issue, we develop a general equilibrium model that shows the relationship between quality/quantity specialization and factor endowments. On the quality demand side, we employ a modified CES utility function to explicitly take into account the consumer's preferences for quality. Quality supply side is modeled by introducing a quality differentiated intermediate goods. The model can perfectly explain the couple of recent important empirical findings (Schott 2004, Hummels and Klenow 2005). One, within-product qualities are positively correlated with capital abundance. Two, capital- (labor-) abundant countries produce higher (lower) qualities in smaller (larger) quantities within a product.
Author: Yo Chul Choi
Publisher:
ISBN:
Category :
Languages : en
Pages : 104
Get Book Here
Book Description
Essay one examines whether a generalized version of Flam and Helpman's (1987) model of vertical differentiation can reconcile three facts. One, countries import only a subset of available varieties. Two, import prices vary across exporters within narrow product categories. Three, US growth in both import variety and import price dispersion has occurred at the same time that the US income distribution has significantly widened. The generalized model maps cross-country differences in income distributions to variation in import variety and price variation. The theoretical predictions are examined and confirmed using panel data on import variety and prices, and detailed income distribution data from the Luxembourg Income Survey. Country pairs whose income distributions are growing more similar over time have growing similarity in the distribution of their import prices, and in the number of common export sources from which they buy. Essay two investigates the theoretical relationship between factor abundance and within-product specialization. To address the issue, we develop a general equilibrium model that shows the relationship between quality/quantity specialization and factor endowments. On the quality demand side, we employ a modified CES utility function to explicitly take into account the consumer's preferences for quality. Quality supply side is modeled by introducing a quality differentiated intermediate goods. The model can perfectly explain the couple of recent important empirical findings (Schott 2004, Hummels and Klenow 2005). One, within-product qualities are positively correlated with capital abundance. Two, capital- (labor-) abundant countries produce higher (lower) qualities in smaller (larger) quantities within a product.
Author: Silja Maren Baller
Publisher:
ISBN:
Category :
Languages : en
Pages :
Get Book Here
Book Description
Author: Chi-Hung Liao
Publisher:
ISBN: 9781321211993
Category :
Languages : en
Pages :
Get Book Here
Book Description
Product quality plays an important role in determining international trade flows. Its level is related to product unit value, characteristics of importing countries, and many other key variables in trade. In this dissertation, we study product quality and its role in various trade topics. In the first chapter, we study its role in price markup and how it is related to the importing countries' income. In the second chapter, we study multi-product firm's decision on exporting the top and the bottom qualities and the range of quality ladder facing different destination markets. In the last chapter, we study how a firm's offshoring decision is related to the quality of final product, the probabilities of making mistakes, the wage difference, and the size of the economy. We will describe each chapter in detail in the following paragraphs. We believe this dissertation complements current literature on product quality and tradein the areas of price markeup, multi-product firm behavior, and offshoring decision. In the first chapter, we begin by documenting the price discrimination practice based on destinations' per-capita income levels from the automobile industry. It is found that low-quality model manufacturers practice price discrimination while high-quality model manufacturers set price more uniformly across destinations. A highly tractable model was developed to capture these different practices of pricing strategies by including the distribution cost in the firm's decision. Each firm in the model simultaneously chooses quality and price to maximize its profits. The model predicts that highly productive firms not only produce higher quality products, but also price their products more uniformly across destinations. An extension of the model that features consumer income inequality predicts that products are sold at higher prices in countries with high income inequality. This result reconciles observations of high prices found in some developing countries such as China. Empirical results support the model's two key predictions: firms with higher productivity price their products more uniformly; and countries' income inequalities affect price positively.The second chapter is motivated by the stylized fact that not all vertically differentiated car models are sold sold in each country. Furthermore, the number of car models sold in each country appear to be systematically affected by destination market's conditions. To study this stylized fact of multi-product firm's decision on quality products, we use a model where firms simultaneously determine optimal prices and the range of quality products. It is found that the top and bottom qualities and the length of the quality ladder are affected systematically by various firm's and market's conditions. The empirical results using European car data from 1993-2011 supports the key predictions in the model.In the last chapter, we are interested in studying firm's offshoring decision and how it is related to product quality. In recent years, the highly intensified and diversified global offshoring activities have been accompanied by some onshoring activities led by large U.S. manufacturing companies. To address this stylized fact, we started with a value-chain offshoring model with product quality specification. Besides the wage difference between countries, the model assumes that each country has a probability of making mistakes. It is found that the range of tasks processed in offshoring destination is related to the probabilities of making mistakes, the wages, and the size of the economies. Increasing the quality of final product, however, does not change the range of products being offshored which implies an onshoring activity. Following the theoretical model, we use the trade data in China from 1998-2013 in the empirical model and confirm the key predictions in the theoretical model. This chapter contributes to current offshoring literature by addressing the product quality specification, the onshoring activities, and identifying the effect of making fewer mistakes on the range of products offshored.
Author: Eddy Bekkers
Publisher: Rozenberg Publishers
ISBN: 905170903X
Category :
Languages : en
Pages : 144
Get Book Here
Book Description
The thesis is organized as follows. Chapter 2 contains a survey of the three most in‡fluential models on fi…rm heterogeneity and of the most important empirical work on firrm heterogeneity. The chapter starts with a brief review of the homogeneous productivity imperfect competition literature. Chapter 2 …finishes with a comparison of the three most in‡fluential models of fi…rm heterogeneity and the oligopoly model put forward in the thesis. Chapter 3 addresses exporting uncertainty under heterogeneous popularity. Chapter 4 contains the chapter on …firm heterogeneity under oligopoly. Chapter 5 constitutes the models on …firm heterogeneity and endogenous quality. Chapter 6 points out the within-sector specialization model. Chapter 7 addresses the effect of importer characteristics on unit values and the role of markups and quality to explain this effect. Chapter 8 concludes.
Author: Silja Baller
Publisher:
ISBN:
Category : Industrial organization
Languages : en
Pages : 0
Get Book Here
Book Description
Author: Ina Charlotte Jäkel
Publisher:
ISBN:
Category :
Languages : en
Pages :
Get Book Here
Book Description
Author: Ahmad Lashkaripour
Publisher:
ISBN:
Category :
Languages : en
Pages :
Get Book Here
Book Description
Each of the three chapters in this dissertation is based on an empirical research paper. The collective goals of these, rather independent, papers is to present an alternative and unifying theory of international specialization. A theory suitable for analyzing international trade at various levels and between a broad set of countries.The first chapter develops a new theory of international specialization that tractably com- bines all aspects of North-North and North-South trade into one model. The new theory also provides an alternative explanation for many other well-established facts, most notably the "Washington apples" effect. The theory builds upon, and retains the central elements of Krug- man [1980]. In the new framework, North-North trade is governed by national product dif- ferentiation. North-South trade is governed by a new channel of across product specialization that has been overlooked in the literature. Specifically, there are many products and each prod- uct comes in different varieties. Products differ in how (horizontally) differentiated they are. Monopolistically competitive firms charge a higher markup for varieties of highly differenti- ated products. In equilibrium, rich countries specialize in highly differentiated--high markup products, while poor countries specialize in less differentiated--low markup products. To quan- tify the gains from trade, I estimate the structural parameters of the model using disaggregated data. Incorporating the new channel of across-product specialization into the Krugman model magnifies the gains from opening to trade by around 200%. Despite trading less, low-income countries experience the largest gains from trade liberalization.The second chapters provides the first empirical confirmation of the iceberg trade cost as- sumption. The assumption is embodied in all major models of International trade. However, empirical evidence to support this rather conventional assumption is lacking. This paper pro- vides such evidence by developing a simple model of international transportation. The model links shipping cost to the f.o.b. price of the shipment, and demonstrates that shipping cost per count is more iceberg-like than shipping cost per kilogram -- existing studies have generallylooked at shipping cost per kilogram for goods that are measured primarily in counts (e.g. TVs, cars). To address this finding, I first calculate price and shipping cost on a per-count basis for goods that report count as the primary unit of measurement in US import data. Then, I estimate the dependence of shipping costs on f.o.b. price. Estimation results strongly support the iceberg specification. Specifically, for every 1% increase in f.o.b. price (per count), the ship- ping cost (per count) increases by 0.91%. The paper then estimates the "Washington apples" effect: the dependance of export f.o.b prices on shipping costs. The effect is estimated to be stronger in industries where shipping costs are more iceberg-like. This suggests that, contrary to common belief, per-unit trade costs cannot be the only driving force behind the "Washing- ton apples" effect. The paper then proceeds to find strong empirical support for an alternative force.The third chapter provides a simple framework to analyze the three main components of international trade flows: (i) the number of goods traded, (ii) the quantity of each good that is shipped, and (iii) the prices they are sold for. While gravity equations are massively suc- cessful in explaining the overall value of trade, they do not provide much insight about the decomposition of trade. In this paper I develop a novel framework that provides, consistent with data, predictions about not only the value of trade but the composition of trade values. I relax the conventional assumption that consumers are identical, and allow for demand hetero- geneity across consumers. I also allow for quality heterogeneity across varieties. The model explains the effect of distance and per capita income on trade along the intensive margin, the extensive margin and the price margin--all of which are well-documented in the empirical literature. It also provides a novel theoretical foundation for the higher price of tradables in developed countries. To further asses the model, I evaluate two predictions, of the model, re- garding the price of traded goods and one prediction regarding the extensive margin of trade. The exercise confirms that all three predictions are borne out in the data. The model provides a framework to investigate the (across-consumer) distributional effects of trade liberalization. I show that, despite the aggregate gains, the poorest consumers experience losses in face of trade liberalization.
Author: Alvaro Felipe Garcia Marin
Publisher:
ISBN:
Category :
Languages : en
Pages : 179
Get Book Here
Book Description
This dissertation empirically examines three different questions related to the behavior and performance of firms participating of international trade. In the first essay, I ask whether exporting allows firms to charge higher markups. To study this question, I use a unique dataset of Chilean manufacturing firms that contains product-level data on the price and average cost for all goods produced and exported. This allows me to compute direct markup measures, and to identify whether markups variation is accounted by different pricing policies or changes in the production cost. Although within firms the export markup premium is moderate -about 2%-, the study of the trajectories of markups before and after export entry reveals the presence of ongoing gains after export entry. While at the moment of export entry the markup of exported products is not different than the markup of domestic products, three periods after export entry the markup wedge increases to about 7-9%. A decomposition of the markup premium reveals that, within firms, the higher markups on exported products is accounted by both higher prices and marginal cost. In contrast, after export entry, prices and average cost tend to decrease. In the second essay -based on joint work with Nico Voigtlaender-, we revisit the old question of whether firms become more productive after export entry. While there is strong evidence for productivity-driven selection into exporting, previous research has mostly failed to identify export-related efficiency gains within plants. This non-result is typically derived from revenue productivity, which reflects price variation. Using a census panel of Chilean manufacturing plants, we first confirm the non-result for revenue productivity. We then compute plant-product level marginal cost as an efficiency measure that is not affected by prices. We find within-plant efficiency gains of 15-25%, the same order of magnitude as selection effects across plants. Evidence suggests that technology upgrading in combination with export entry is an important driver behind these gains. The final essay studies firms' quality patterns across destinations, when they produce products in different quality segments. I develop a quality model with non-homothetic quality demand and heterogeneity in consumers' income. The model features quality sorting of consumers according to their income level. This implies that firm's quality allocation depends not only on the average income of the country, but on the entire income distribution of the country. The main prediction of the model is related to the role of income inequality on within-firm quality patters. I find that in countries with a smaller middle classes, firms' tend to skew their exports towards products of higher quality. This effect tends to be weaker in countries with higher income. To illustrate the main predictions of the model, I use a unique dataset from the Chilean wine industry. This dataset allows me to construct measures of product quality, that are not affected by aggregation or markup issues. In line with the model's predictions, I find that firms tend export proportionally more high quality products to more unequal countries. However, I find this effect to be quantitatively important only in low and middle-income countries.
Author: Sangho Kim
Publisher:
ISBN:
Category : Commercial policy
Languages : en
Pages : 388
Get Book Here
Book Description
Author: Pradeep S. Mehta
Publisher: Cameron May
ISBN: 1874698694
Category : Developing countries
Languages : en
Pages : 384
Get Book Here
Book Description
