TRADE LIBERALIZATION, QUALITY, AND EXPORT PRICES

This paper presents theory and evidence from disaggregated Chinese data that tariff reductions induce a country's producers to upgrade the quality of their exports. We first document stylized facts regarding the effect of trade liberalization on export prices. Next, we develop an analytic frame...

Full description

Saved in:
Bibliographic Details
Published in:The review of economics and statistics 2015-12, Vol.97 (5), p.1033-1051
Main Authors: Fan, Haichao, Li, Yao Amber, Yeaple, Stephen R.
Format: Article
Language:English
Subjects:
Economic aspects
Economic models
Exports
Forecasts and trends
Prices
Prices and rates
Studies
Tariffs
Trade liberalization
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:This paper presents theory and evidence from disaggregated Chinese data that tariff reductions induce a country's producers to upgrade the quality of their exports. We first document stylized facts regarding the effect of trade liberalization on export prices. Next, we develop an analytic framework that relates a firm's choice of quality to its access to imported intermediates. In the model, a reduction in import tariffs induces a firm to increase export quality and raise its export price in industries where the scope for quality differentiation is large and lower its export price in industries where the scope is small. The predictions are consistent with the stylized facts and are highly robust econometrically.
ISSN:0034-6535
1530-9142
DOI:10.1162/REST_a_00524