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Trade Liberalization, Quality, and Export Prices

Author

Listed:
  • Haichao Fan

    () (School of International Business Administration, Shanghai University of Finance and Economics)

  • Yao Amber Li

    () (Department of Economics, Hong Kong University of Science and Technology
    Institute for Emerging Market Studies, Hong Kong University of Science and Technology)

  • Stephen R. Yeaple

    () (Department of Economics, Pennsylvania State University
    National Bureau of Economic Research (NBER))

Abstract

This paper presents theory and evidence from highly disaggregated Chinese data that tariff reductions induce exporters to upgrade product quality. The paper documents two stylized facts and develops a simple analytic framework to predict that import tariff reductions induce an incumbent importer/exporter to increase the quality of its exports and to raise its export price in industries where the scope for quality differentiation is large while to lower its export price in industries where the scope for quality differentiation is small. The predictions are consistent with the stylized facts based on Chinese data and robust to various estimation specifications.

Suggested Citation

  • Haichao Fan & Yao Amber Li & Stephen R. Yeaple, 2015. "Trade Liberalization, Quality, and Export Prices," HKUST IEMS Working Paper Series 2015-01, HKUST Institute for Emerging Market Studies, revised Jan 2015.
  • Handle: RePEc:hku:wpaper:201501
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    trade liberalization; tariff; quality upgrading; export price; quality differentiation;

    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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