Export prices, product quality and firms' characteristic: An analisys on a sample of Italian firms
AbstractThe unsatisfactory performance of Italian export volumes in the last decade has been attributed to three factors; the product specialization still centered around traditional sectors, the small firm size and the exceptional rise in export unit values. This paper analyzes the latter with the aim of testing three alternative hypotheses: i) measurement error; ii) composition effect: globalization forcing the exit of less productive firms producing low quality goods would have raised the average quality and thus prices of exported goods; iii) pricing strategies: Italian firms would have maximized profit margins sacrificing volumes. On the basis of sample data on price variations by destination market at the firm-level, we find that: a) in the last decade (1996-2005), export unit values have overestimated export price dynamics by 2 percentage points on average every year; b) on the basis of our new export prices, the Italian loss in world market share has been smaller, but still larger as compared to France and Germany; c) the composition effect has had a limited role.
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Bibliographic InfoPaper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 634.
Date of creation: Jun 2007
Date of revision:
export unit values; product quality; firm size;
Find related papers by JEL classification:
- F1 - International Economics - - Trade
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-10-20 (All new papers)
- NEP-EEC-2007-10-20 (European Economics)
- NEP-INT-2007-10-20 (International Trade)
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- Imbriani, Cesare & Morone, Piergiuseppe & Testa, Giuseppina, 2008. "Exporting quality: is it the right strategy for the Italian manufacturing sector?," MPRA Paper 13327, University Library of Munich, Germany.
- Eugenio Gaiotti, 2010. "Commentary: Has Globalization Changed the Phillips Curve? Firm-Level Evidence on the Effect of Activity on Prices," International Journal of Central Banking, International Journal of Central Banking, vol. 6(1), pages 51-84, March.
- Gaiotti, Eugenio, 2008.
"Has globalisation changed the Phillips curve? Firm-level evidence on the effect of activity on prices,"
8389, University Library of Munich, Germany.
- Eugenio Gaiotti, 2008. "Has globalisation changed the Phillips curve? Firm-level evidence on the effect of activity on prices," Temi di discussione (Economic working papers) 676, Bank of Italy, Economic Research and International Relations Area.
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