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 Institute of Economics, Hungarian Academy of Sciences in its series IEHAS Discussion Papers with number 1003.
Length: 30 pages
Date of creation: Feb 2010
Date of revision:
export; price; selection; Hungary;
Other versions of this item:
- 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.
- Görg, Holger & Halpern, László & Muraközy, Balázs, 2010. "Why do within firm-product export prices differ across markets?," CEPR Discussion Papers 7708, C.E.P.R. Discussion Papers.
- D40 - Microeconomics - - Market Structure and Pricing - - - General
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-04-24 (All new papers)
- NEP-BEC-2010-04-24 (Business Economics)
- NEP-INT-2010-04-24 (International Trade)
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