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Measuring the benefits of foreign product variety with an accurate variety set

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  • Blonigen, Bruce A.
  • Soderbery, Anson

Abstract

Recent studies have used import data to assess the impact of foreign varieties on domestic prices and welfare. We employ a market-based data set on the U.S. automobile market that allows us to define goods varieties at a more precise level, as well as discern location of production and ownership of varieties. Our estimates of price and welfare changes from new varieties in the U.S. automobile sector are twice as large as standard estimates when using our detailed market-based data. We also show that new varieties introduced by foreign-owned affiliates provided an additional 70% welfare gain during our sample.

Suggested Citation

  • Blonigen, Bruce A. & Soderbery, Anson, 2010. "Measuring the benefits of foreign product variety with an accurate variety set," Journal of International Economics, Elsevier, vol. 82(2), pages 168-180, November.
  • Handle: RePEc:eee:inecon:v:82:y:2010:i:2:p:168-180
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Berlingieri, Giuseppe & Breinlich, Holger & Dhingra, Swati, 2016. "The Impact of Trade Agreements on Consumer Welfare," CEPR Discussion Papers 11148, C.E.P.R. Discussion Papers.
    2. Blonigen, Bruce A. & Knittel, Christopher R. & Soderbery, Anson, 2017. "Keeping it fresh: Strategic product redesigns and welfare," International Journal of Industrial Organization, Elsevier, vol. 53(C), pages 170-214.
    3. Lewrick, Ulf & Mohler, Lukas & Weder, Rolf, 2011. "International Trade in Variety and Domestic Production," Working papers 2011/03, Faculty of Business and Economics - University of Basel.
    4. Konstantins Benkovskis & Ramune Rimgailaite, 2011. "The quality and variety of exports from the new EU member states," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 19(4), pages 723-747, October.
    5. Konstantins Benkovskis & Julia Wörz, 2016. "Non-price competitiveness of exports from emerging countries," Empirical Economics, Springer, vol. 51(2), pages 707-735, September.
    6. Lukas Mohler, 2011. "Variety Gains from Trade in Switzerland," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 147(I), pages 45-70, March.
    7. repec:eee:eecrev:v:100:y:2017:i:c:p:1-27 is not listed on IDEAS
    8. Lukas Mohler & Michael Seitz, 2012. "The gains from variety in the European Union," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 148(3), pages 475-500, September.
    9. Wyatt J. Brooks & Pau S. Pujolàs, 2014. "Nonlinear Gravity," Department of Economics Working Papers 2014-15, McMaster University.
    10. Nakhoda, Aadil, 2012. "The effect of foreign competition on product switching activities: A firm level analysis," MPRA Paper 39167, University Library of Munich, Germany.
    11. Lugovskyy, Volodymyr & Skiba, Alexandre, 2015. "How geography affects quality," Journal of Development Economics, Elsevier, vol. 115(C), pages 156-180.
    12. Benkovskis, Konstantins & Wörz, Julia, 2013. "What drives the market share changes? : Price versus non-price factors," BOFIT Discussion Papers 18/2013, Bank of Finland, Institute for Economies in Transition.
    13. Konstantins Benkovskis & Julia Wörz, 2014. "How does taste and quality impact on import prices?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(4), pages 665-691, November.
    14. Lugovskyy, Volodymyr & Skiba, Alexandre, 2016. "Positive and negative effects of distance on export prices," Journal of Economic Behavior & Organization, Elsevier, vol. 127(C), pages 155-181.
    15. Breinlich, Holger & Dhingra, Swati & Ottaviano, Gianmarco I. P., 2016. "How have EU’s trade agreements impacted consumers?," LSE Research Online Documents on Economics 66434, London School of Economics and Political Science, LSE Library.
    16. McCalman, Phillip & Spearot, Alan, 2013. "Why trucks jump: Offshoring and product characteristics," Journal of International Economics, Elsevier, vol. 91(1), pages 82-95.
    17. Konstantins Benkovskis & Julia Wörz, 2012. "Non-Price Competitiveness Gains of Central, Eastern and Southeastern European Countries in the EU Market," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 27-47.
    18. Konstantins Benkovskis & Julia Wörz, 2011. "How Does Quality Impact on Import Prices?," Working Papers 175, Oesterreichische Nationalbank (Austrian Central Bank).
    19. Soderbery, Anson, 2015. "Estimating import supply and demand elasticities: Analysis and implications," Journal of International Economics, Elsevier, vol. 96(1), pages 1-17.
    20. Sly, Nicholas & Soderbery, Anson, 2014. "Strategic sourcing and wage bargaining," Journal of Development Economics, Elsevier, vol. 109(C), pages 172-187.
    21. Mohler, Lukas, 2012. "Variety Gains and the Extensive Margin of Trade," Working papers 2012/16, Faculty of Business and Economics - University of Basel.
    22. Springborn, Michael & Romagosa, Christina M. & Keller, Reuben P., 2011. "The value of nonindigenous species risk assessment in international trade," Ecological Economics, Elsevier, vol. 70(11), pages 2145-2153, September.
    23. Sónia Cabral & Cristina Manteu, 2011. "The price elasticity of external demand: how does Portugal compare with other euro area countries?," Working Papers w201127, Banco de Portugal, Economics and Research Department.

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