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Firm Heterogeneity and Export Pricing in India

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  • Michael A. Anderson
  • Martin H. Davies
  • José E. Signoret
  • Stephen L. S. Smith

Abstract

We examine export pricing by Indian manufacturing firms in the early 2000s using a unique data set that matches firm characteristics with product and destination‐level trade data. We find that, in contrast to China and other countries, firm productivity is negatively associated with export prices, and export prices are negatively associated with distance while positively associated with remoteness. Our conjecture is that Indian innovation costs, which are higher than China's, drive down the scope for quality differentiation causing a negative association between productivity and prices. To the best of our knowledge, this is the first empirical evidence consistent with heterogenous goods and short quality ladders, a theoretical possibility noted in the study by Antoniades (2012), an outcome that arises here because of domestic Indian economic and regulatory features.

Suggested Citation

  • Michael A. Anderson & Martin H. Davies & José E. Signoret & Stephen L. S. Smith, 2019. "Firm Heterogeneity and Export Pricing in India," Southern Economic Journal, John Wiley & Sons, vol. 85(3), pages 985-1004, January.
  • Handle: RePEc:wly:soecon:v:85:y:2019:i:3:p:985-1004
    DOI: 10.1002/soej.12316
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    File URL: https://doi.org/10.1002/soej.12316
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    Cited by:

    1. Bastos, Paulo & Silva, Joana, 2010. "The quality of a firm's exports: Where you export to matters," Journal of International Economics, Elsevier, vol. 82(2), pages 99-111, November.
    2. Fariha Kamal & Ryan Monarch, 2018. "Identifying foreign suppliers in U.S. import data," Review of International Economics, Wiley Blackwell, vol. 26(1), pages 117-139, February.

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