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Quality competition, Pricing-To-Market and Non-Tariff measures: A Unified Framework For the Analysis of Bilateral Unit Values

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  • Michael Ferrantino
  • Robert M. Feinberg
  • Lauren Deason

Abstract

This paper presents a unified framework for analyzing several factors that have been independently studied as determinants of unit values in international trade: product differentiation by quality (which suggests that unit values should be positively correlated with exporters' per capita income), pricing-to-market (which suggests they should be positively correlated with importers' per capita income), and non-tariff measures (which suggests that remaining residuals may contain evidence of trade barriers). On a large sample of bilateral unit values for 2005, we find that about 58 percent of all HS-6 products demonstrate both significant quality-ladder effects and pricing-to-market effects, with quality-ladder effects predominating in importance. Distance-related effects appearing directly in prices appear significantly larger than one would expect as a result of shipping margins. We also rank importers by the remaining unexplained variation in import prices, and examine whether these variations are plausibly related to non-tariff measures.

Suggested Citation

  • Michael Ferrantino & Robert M. Feinberg & Lauren Deason, 2009. "Quality competition, Pricing-To-Market and Non-Tariff measures: A Unified Framework For the Analysis of Bilateral Unit Values," Working Papers 2009-03, American University, Department of Economics.
    • Handle: RePEc:amu:wpaper:2009-03
    DOI: 10.17606/nrf3-d420
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    References listed on IDEAS

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    Cited by:

    1. Fedoseeva Svetlana, 2013. "(A)symmetry, (Non)linearity and Hysteresis of Pricing-To-Market: Evidence from German Sugar Confectionery Exports," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 11(1), pages 1-17, January.

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    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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