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Markups, quality, and transport costs

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  • Martin, Julien

Abstract

This paper provides new evidence on trade prices based on firm-level data from France. It shows that firms charge higher free-on-board (net of transportation costs, hereafter noted as fob) unit values on exports to more distant countries. This finding holds within firms and products, and across destinations. The price premium paid by distant consumers is due to firms charging higher fob prices, and to higher transportation costs. A simple decomposition of the elasticity of import prices to distance shows that, after a fall in transport costs, almost 80% of the decline in import prices enjoyed by consumers is due to firms charging lower fob prices. This suggests a new channel through which changes in transport costs may affect welfare.

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Bibliographic Info

Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 56 (2012)
Issue (Month): 4 ()
Pages: 777-791

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Handle: RePEc:eee:eecrev:v:56:y:2012:i:4:p:777-791

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Web page: http://www.elsevier.com/locate/eer

Related research

Keywords: Firm-level data; Free-on-board unit values; Welfare;

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References

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Cited by:
  1. Gábor Békés & Lionel Fontagné & Balázs Muraközy & Vincent Vicard, 2012. "How frequently firms export? Evidence from France," Working Papers 2012-06, CEPII research center.
  2. Gormsen, Christian, 2009. "Intransparent Markets and Intra-Industry Trade," Working Papers 09-20, University of Aarhus, Aarhus School of Business, Department of Economics.
  3. Matthieu Crozet & Emmanuel Milet & Daniel Mirza, 2013. "The Discriminatory Effect of Domestic Regulations on International Trade in Services: Evidence from Firm-Level Data," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00801398, HAL.
  4. James Harrigan & Xiangjun Ma & Victor Shlychkov, 2011. "Export Prices of U.S. Firms," NBER Working Papers 17706, National Bureau of Economic Research, Inc.
  5. Hélène LATZER & Florian MAYNERIS, 2012. "Income distribution and vertical comparative advantage Theory and evidence," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2012018, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES), revised 20 Oct 2012.
  6. Rollo, Valentina, 2012. "Determinants of Tanzanian export prices," Policy Research Working Paper Series 6225, The World Bank.
  7. Matthieu Crozet & Emmanuel Milet & Daniel Mirza, 2012. "The Discriminatory Effect of Domestic Regulations on International Services Trade," Working Papers 2012-02, CEPII research center.
  8. Evgeny Zhelobodko & Sergey Kokovin & Mathieu Parenti & Jacques-François Thisse, 2011. "Monopolistic competition in general equilibrium: Beyond the CES," Working Papers halshs-00566431, HAL.
  9. Berman, Nicolas & de Sousa, José & Martin, Philippe & Mayer, Thierry, 2012. "Time to ship during financial crises," CEPR Discussion Papers 9089, C.E.P.R. Discussion Papers.
  10. Christian Gormsen, 2012. "Intransparent Markets and Intra-Industry Trade," Post-Print halshs-00678264, HAL.
  11. Matthieu Crozet & Guy Lalanne & Sandra Poncet, 2010. "Wholesalers in International Trade," Working Papers 2010-31, CEPII research center.
  12. Gullstrand, Joakim & Olofsdotter, Karin & Thede, Susanna, 2011. "Markups and export pricing," Working Papers 2011:37, Lund University, Department of Economics.
  13. Kokovin, Sergey & Thisse, Jacques-François & Zhelobodko, Evgeny, 2010. "Monopolistic Competition: Beyond the CES," CEPR Discussion Papers 7947, C.E.P.R. Discussion Papers.

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