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International trade, quality sorting and trade costs: the case of Cognac

Author

Listed:
  • Charlotte Emlinger

    (CEPII - Centre d'études prospectives et d'informations internationales)

  • Viola Lamani

    (UMR MOISA - Marchés, Organisations, Institutions et Stratégies d'Acteurs - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - CIHEAM-IAMM - Centre International de Hautes Etudes Agronomiques Méditerranéennes - Institut Agronomique Méditerranéen de Montpellier - CIHEAM - Centre International de Hautes Études Agronomiques Méditerranéennes - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

This paper tests empirically the validity of the Alchian and Allen effect stipulating that per-unit trade costs increase the relative demand for higher-quality goods. We use an original dataset of French Cognac exports by quality designations and estimate the impact of trade costs on the share of high quality Cognac. The definition of quality, based on the minimum time in oak of the youngest eau-de-vie (wine brandy) used in creating the blend, is objective and time-invariant, which makes the case of Cognac particularly relevant to analyze the impact of different trade costs on its quality mix. We investigate both the impact of distance and customs duties on Cognac's quality mix, from 1996 to 2013, and the impact of a variation in trade costs, brought by the containerization of shipping, between 1969 and 2013. Our results confirm the presence of the Alchian and Allen effect.

Suggested Citation

  • Charlotte Emlinger & Viola Lamani, 2020. "International trade, quality sorting and trade costs: the case of Cognac," Post-Print hal-02918990, HAL.
  • Handle: RePEc:hal:journl:hal-02918990
    DOI: 10.1007/s10290-019-00372-z
    Note: View the original document on HAL open archive server: https://hal.inrae.fr/hal-02918990
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    Cited by:

    1. Chen, Natalie & Juvenal, Luciana, 2022. "Markups, quality, and trade costs," Journal of International Economics, Elsevier, vol. 137(C).
    2. 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.
    3. Duvaleix, Sabine & Emlinger, Charlotte & Gaigné, Carl & Latouche, Karine, 2021. "Geographical indications and trade: Firm-level evidence from the French cheese industry," Food Policy, Elsevier, vol. 102(C).
    4. Filippis, Fabrizio De & Giua, Mara & Salvatici, Luca & Vaquero-Pineiro, Cristina, 2021. "The International Competitiveness of Geographical Indications: Hype or Hope?," 2021 Conference, August 17-31, 2021, Virtual 315147, International Association of Agricultural Economists.
    5. Chen, Natalie & Juvenal, Luciana, 2022. "Markups, quality, and trade costs," Journal of International Economics, Elsevier, vol. 137(C).
    6. Olivier BARGAIN & Jean-Marie CARDEBAT & Raphaël CHIAPPINI, 2020. "Trade Uncorked: Genetic Resistance and Quality Heterogeneity in Wine Exports," Bordeaux Economics Working Papers 2020-18, Bordeaux School of Economics (BSE).

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    More about this item

    Keywords

    Quality mix; Luxury product; Distance; Tariffs;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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