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Price, Quality, and International Agricultural Trade

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Author Info

  • Darian Woods

    () (The Treasury)

  • Andrew Coleman

    () (Motu Economic and Public Policy Research and the Treasury)

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    Abstract

    The average value of a particular class of agricultural exports varies widely across different destinations. This raises the question: in the event of a supply shock, such as the implementation of the Emissions Trading Scheme, can farmers offset higher costs by raising their average prices by contracting exports to lower value destinations? If the difference in value reflects different prices because producers have market power, the answer will be “yes”. If the difference in value reflects differences in the quality of goods exported to different destinations, the answer is “no.” This paper use a variety of trade data and techniques to examine which explanation is most likely to be relevant. While the answers are not definitive, there is little support for the hypothesis that exports are curtailed.

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    File URL: http://motu-www.motu.org.nz/wpapers/12_08.pdf
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    Bibliographic Info

    Paper provided by Motu Economic and Public Policy Research in its series Working Papers with number 12_08.

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    Length: 41 pages
    Date of creation: Jul 2012
    Date of revision:
    Handle: RePEc:mtu:wpaper:12_08

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    Related research

    Keywords: Agriculture; exports; emissions trading scheme; price; quality; market power; international trade; New Zealand;

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    1. Hallak, Juan Carlos, 2006. "Product quality and the direction of trade," Journal of International Economics, Elsevier, vol. 68(1), pages 238-265, January.
    2. Richard Fabling & Arthur Grimes & Lynda Sanderson, 2011. "Whatever next? Export market choices of New Zealand firms," ERSA conference papers ersa10p367, European Regional Science Association.
    3. Aiginger, Karl, 1997. "The Use of Unit Values to Discriminate between Price and Quality Competition," Cambridge Journal of Economics, Oxford University Press, vol. 21(5), pages 571-92, September.
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