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Consumer Taste in Trade?

Author

Listed:
  • Bee Yan Aw-Roberts
  • Yi Lee
  • Hylke Vandenbussche

Abstract

This paper documents the importance of consumer taste for the food industry using firm-product level customs data by destination country. We identify consuer taste through the use of a control function approach and estimate it jointly with other demand parameters using a flexible demand specification. We find that, on average, consumer taste explains as much of the variation in export revenue as marginal costs. The contribution of consumer taste to export revenue variation, ranges between 2% to 30% depending on the product category in the food industry. Our results also show that consumer taste decreases in distance but this relationship is non-monotonic.

Suggested Citation

  • Bee Yan Aw-Roberts & Yi Lee & Hylke Vandenbussche, 2020. "Consumer Taste in Trade?," Working Papers of Department of Economics, Leuven 664290, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    • Handle: RePEc:ete:ceswps:664290
    Note: paper number 14941
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    1. is not listed on IDEAS
    2. Agbekponou, Kossi-Messanh & Cheptea, Angela & Latouche, Karine, 2022. "Quality upgrading and position in global value chains," 2022: Transforming Global Value Chains, December 11-13, Clearwater Beach, FL 339411, International Agricultural Trade Research Consortium.
    3. Zohra Bouamra-Mechemache & Carl Gaigné & Stéphane Turolla, 2025. "On the Promotion of Domestic Food Industry. Quantifying the Effects of Reducing Labor Cost and Upgrading Quality [Promouvoir les industries agroalimentaires domestiques : Evaluer les effets de la diminution du coût du travail et de la montée en ga," Working Papers hal-05067193, HAL.
    4. Kossi Messanh Agbekponou & Ilaria Fusacchia, 2024. "Positioning and bargaining power in agri-food global value chains," Post-Print hal-04666053, HAL.
    5. Kossi Messanh Agbekponou & Angela Cheptea & Karine Latouche, 2023. "Quality upgrading and position in global value chains: Firm-level evidence from the French agri-food industry," Post-Print hal-04321480, HAL.
    6. Anne C. Wunderlich & Andreas Kohler, 2022. "Data of National Dishes in the Developed and Developing Countries in the World, Their Similarity and Trade Flows," Data, MDPI, vol. 7(11), pages 1-6, October.
    7. Kossi Messanh Agbekponou & Ilaria Fusacchia, 2024. "Positioning and bargaining power in agri-food global value chains," Post-Print hal-04666067, HAL.

    More about this item

    Keywords

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    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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