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Input-trade liberalization, export prices and quality upgrading

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  • Bas, Maria
  • Strauss-Kahn, Vanessa

Abstract

This paper explores the impact of input trade liberalization on imported input and exported product prices. Using Chinese transaction data for 2000–2006, we capture causal effects between exogenous input tariff reductions and within firm changes in HS6-traded product prices. For identification, we make use of a natural control group of firms that are exempted from paying tariffs. Both imported input and export prices rise. The effect on export prices is specific to firms sourcing inputs from developed economies and exporting output to high-income countries. Results are consistent with a scenario within which firms exploit the input tariff cuts to access high-quality inputs in order to quality-upgrade their exports.

Suggested Citation

  • Bas, Maria & Strauss-Kahn, Vanessa, 2015. "Input-trade liberalization, export prices and quality upgrading," Journal of International Economics, Elsevier, vol. 95(2), pages 250-262.
    • Handle: RePEc:eee:inecon:v:95:y:2015:i:2:p:250-262
    DOI: 10.1016/j.jinteco.2014.12.005
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    More about this item

    Keywords

    Imported inputs; Trade liberalization; Export prices; Quality upgrade; Mark-up; Firm-level data;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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