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China’s competition and the export price strategies of developed countries

Listed author(s):
  • Giorgia Giovannetti
  • Marco Sanfilippo

This paper analyzes the impact of Chinese competition on developed countries’ export prices. The empirical application is on Italy, one of the main European manufacturing exporters with exports at high risk of competition from China. Our results show that, following China’s entry into the WTO, the price strategies of Italian firms has been affected. While in general the increasing Chinese export competition resulted in an upgrading of products exported, the impact has been different according to the sector and technological level. The incentives to upgrade have been stronger for low technology sectors, where competition is tougher and varieties of products sold lower. To highlight quality differentials, and isolate the effects on the different segments of the distribution of Italy’s export prices, we run quantile regressions. We find that are mainly those products sold at low prices to face a strong pressure to upgrade.

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File URL: http://hdl.handle.net/10.1080/02692171.2015.1102205
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Article provided by Taylor & Francis Journals in its journal International Review of Applied Economics.

Volume (Year): 30 (2016)
Issue (Month): 2 (March)
Pages: 238-254

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Handle: RePEc:taf:irapec:v:30:y:2016:i:2:p:238-254
DOI: 10.1080/02692171.2015.1102205
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  1. Lall, Sanjaya & Albaladejo, Manuel, 2004. "China's Competitive Performance: A Threat to East Asian Manufactured Exports?," World Development, Elsevier, vol. 32(9), pages 1441-1466, September.
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  15. Warmedinger, Thomas, 2004. "Import prices and pricing-to-market effects in the euro area," Working Paper Series 299, European Central Bank.
  16. repec:pit:wpaper:391 is not listed on IDEAS
  17. Raphael Kaplinsky & Amelia U. Santos-Paulino, 2006. "A disaggregated analysis of EU imports: the implications for the study of patterns of trade and technology," Cambridge Journal of Economics, Oxford University Press, vol. 30(4), pages 587-611, July.
  18. Fu, Xiaolan & Kaplinsky, Raphael & Zhang, Jing, 2012. "The Impact of China on Low and Middle Income Countries’ Export Prices in Industrial-Country Markets," World Development, Elsevier, vol. 40(8), pages 1483-1496.
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