Why do within firm-product export prices differ across markets?
AbstractIn this paper we analyse the relationship between gravity variables and f.o.b. export unit values using Hungarian firm-product-destination data. By taking firm-product level selection into account we show that export unit values increase with distance even for particular firm-product combinations. This cannot be explained by models assuming firm- or even firm-product level selection and constant markups. The differences are important quantitatively; price differences in Hungarian exports between Germany and the US are about 30%. We also show that unit values are positively related to GDP/capita and that there is a weak negative relationship between unit values and market size. We propose two possible explanations: first, firms may export different quality versions of the same product to different markets. Secondly, directly exporting firms may capture part of the markups on transport costs in their f.o.b. prices.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7708.
Date of creation: Feb 2010
Date of revision:
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Other versions of this item:
- Holger Gorg & Laszlo Halpern & Balazs Murakozy, 2010. "Why Do Within Firm-Product Export Prices Differ across Markets?," IEHAS Discussion Papers 1003, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
- Holger Görg & László Halpern & Balász Muraközy, 2010. "Why do within firm-product export prices differ across markets?," Kiel Working Papers 1596, Kiel Institute for the World Economy.
- D40 - Microeconomics - - Market Structure and Pricing - - - General
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
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