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Quality Competition Versus Price Competition Goods: An Empirical Classification

Author

Listed:
  • Richard E. Baldwin

    (Graduate Institute)

  • Tadashi Ito

    (Okinawa University)

Abstract

Based on theoretical distinctions suggested by the heterogeneous firms trade model and the quality heterogeneous firms trade model, we classify exports at the HS 6-digit level as being characterised by either quality or price competition. We find a high proportions of quality-competition goods for the major EU countries and lower proportions for Canada, Australia and China. However, the overlap of these quality-competition goods is not large which suggests that the HS-6 digit data is too aggregate; firm-level data may be needed. Our findings suggest that dumping investigations must pay careful attention to the exact definition of products, and the study of technological gaps across nations by analysing composition of their export basket (Hausman, Huang and Rodrik 2007) should be interpreted with caution.

Suggested Citation

  • Richard E. Baldwin & Tadashi Ito, 2011. "Quality Competition Versus Price Competition Goods: An Empirical Classification," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 26, pages 110-135.
    • Handle: RePEc:ris:integr:0532
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    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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