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Surviving the U.S. Import Market: The Role of Product Differentiation

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  • Tibor Besedes
  • Thomas J. Prusa

Abstract

We examine the extent that product differentiation affects the duration of US import trade relationships. Applying nonparametric and semiparametric techniques to highly disaggregated product-level data we estimate that the hazard rate is at least 18 percent higher for homogenous goods than for differentiated products. Put another way, the median survival time for trade relationships involving differentiated products is five years as compared to two years for homogenous products. We find that our results are not only highly robust but often are strengthened under alternative specifications. For instance, if we define trade relationships using industry-level rather than product-level data we find that the hazard rate is 30-35 percent higher for homogenous goods than for differentiated products. We also find that the survival ranking across product types holds across individual industries. We show that dropping the smallest trade relationships further accentuates the differences among product types. We also control for the possible measurement error in measuring spell lengths and the role of multiple spell relationships and find that in all cases the differences among products types are greater than in our benchmark analysis.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10319.

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Date of creation: Feb 2004
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Handle: RePEc:nbr:nberwo:10319

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References

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Cited by:
  1. Cadot, Olivier & Carrere, Celine & Strauss-Kahn, Vanessa, 2011. "OECD imports : diversification of suppliers and quality search," Policy Research Working Paper Series 5627, The World Bank.
  2. Changchun Hua & Douglas H. Brooks, 2010. "Asian Trade and Global Linkages," Working Papers id:3094, eSocialSciences.
  3. KANG, Kichun, 2008. "How much have been the export products changed from homogeneous to differentiated? Evidence from China, Japan, and Korea," China Economic Review, Elsevier, vol. 19(2), pages 128-137, June.
  4. Céline CARRERE & Olivier CADOT & Vanessa STRAUSS-KHAN & Madina KUKENOVA, 2009. "OECD Imports: Diversification and quality search," Working Papers 200909, CERDI.
  5. Christodoulopoulou, Styliani, 2010. "THE Effects of Multilateral Trade Liberalization on the Extensive and the Intensive Margins of Trade," MPRA Paper 29169, University Library of Munich, Germany.
  6. repec:hal:wpaper:halshs-00797006 is not listed on IDEAS
  7. Cadot, Olivier & Jaud, Mélise & Suwa Eisenmann, Akiko, 2009. "Do Food Scares Explain Supplier Concentration? An Analysis of EU Agri-food Imports," CEPR Discussion Papers 7431, C.E.P.R. Discussion Papers.
  8. Julia Cagé & Dorothée Rouzet, 2014. "Improving "National Brands": Reputation for Quality and Export Promotion Strategies," PSE Working Papers halshs-00797006, HAL.

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