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Who Exports Better Quality Products to Smaller or More Distant Markets?

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  • Unjung Whang

Abstract

The role of across-firm differences in product quality and firms' competitiveness in determining the spatial patterns of within-product export unit values across destinations is examined in this paper. Using product level export data, it is shown that the average export unit value of a product shipped from the USA or Korea increases with distance and decreases with destination market's size. However, within-product average unit values for products exported from China and India decrease with distance and increase with market size. To interpret these different spatial patterns of unit values across exporting countries, model of quality heterogeneity is developed in which firms differ in their workers' skill level and higher-skilled workers show greater productivity in performing tasks that improve product quality. The model predicts that in relatively skill-abundant countries, exporting firms specialize in high-quality products using relatively cheap skilled labor, whereas, in relatively skill-scarce countries, firms that produce lower-quality products are more competitive.

Suggested Citation

  • Unjung Whang, 2014. "Who Exports Better Quality Products to Smaller or More Distant Markets?," Review of International Economics, Wiley Blackwell, vol. 22(3), pages 578-598, August.
    • Handle: RePEc:bla:reviec:v:22:y:2014:i:3:p:578-598
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    File URL: http://hdl.handle.net/10.1111/roie.12134
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    References listed on IDEAS

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    Cited by:

    1. Yang, Chih-Hai & Tsou, Meng-Wen, 2015. "Multinational exposure, export variety and price: Evidence from Chinese electronics exporters," Journal of the Japanese and International Economies, Elsevier, vol. 38(C), pages 93-110.
    2. Unjung Whang, 2016. "Skilled-Labor Intensity Differences Across Firms, Endogenous Product Quality, and Wage Inequality," Open Economies Review, Springer, vol. 27(2), pages 251-292, April.
    3. Jin Sun, 2021. "Do Higher‐Quality Regional Trade Agreements Improve the Quality of Export Products from China to “One‐Belt One‐Road” Countries?," Asian Economic Journal, East Asian Economic Association, vol. 35(2), pages 142-165, June.
    4. Mallick, Sushanta & Marques, Helena, 2016. "Does quality differentiation matter in exporters' pricing behaviour? Comparing China and India," China Economic Review, Elsevier, vol. 40(C), pages 71-90.

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