Entry into Export Markets and Product Quality Differences
AbstractUsing a rich dataset of Chilean exporters, we analyze several issues related to the relationship between entry into export markets and product quality. We find that every year a large number of new exporting relationships are initiated, but the survival rate of these entries is very low and declines over time. Using unit values as a proxy for product quality, our estimations show that entry is generally associated with higher product quality. This higher product quality, however, tends to reduce over time and eventually disappears three years after entry. To better identify this effect, we explore whether there are systematic differences across sectors. As expected, for sectors in which quality differentiation may be important, our findings reveal that reference-price and differentiated products show a higher price in the year of entry and it takes longer to converge to the incumbent prices. These results hold after controlling for potential sample selection bias.
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Bibliographic InfoPaper provided by Instituto de Economia. Pontificia Universidad Católica de Chile. in its series Documentos de Trabajo with number 367.
Date of creation: 2009
Date of revision:
Unit-value exports; product quality; price dynamics;
Other versions of this item:
- Roberto Álvarez; J. & Rodrigo Fuentes, 2009. "Entry into Export Markets and Product Quality Differences," Working Papers Central Bank of Chile 536, Central Bank of Chile.
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-01-16 (All new papers)
- NEP-IND-2010-01-16 (Industrial Organization)
- NEP-INT-2010-01-16 (International Trade)
- NEP-LAM-2010-01-16 (Central & South America)
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