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Why do within firm-product export prices differ across markets?

  • Holger Görg
  • László Halpern
  • Balász Muraközy

In this paper we analyze the relationship between gravity variables and f.o.b. export unit values using Hungarian firm-product-destination data. By taking firm-product level selection into account we show that export unit values increase with distance even for particular firm-product level selection and constant markups. The differences are important quantitatively; price differences in Hungarian exports between Germany and the US are about 30%. We also show that unit values are positively related to GDP/capita and that there is a weak negative relationship between unit values and market size. We propose two possible explanations: first, firms may export different quality versions of the same product to different markets. Secondly, directly exporting firms may capture part of the markups on transport cots in their f.o.b. prices

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File URL: https://www.ifw-members.ifw-kiel.de/publications/why-do-within-firm-product-export-prices-differ-across-markets-1/why-do-within-firm-product-export-prices-differ-across-markets.pdf
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Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1596.

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Length: 27 pages
Date of creation: Feb 2010
Date of revision:
Handle: RePEc:kie:kieliw:1596
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  1. Matthieu Crozet & Keith Head & Thierry Mayer, 2009. "Quality Sorting and Trade: Firm-Level Evidence for French Wine," Working Papers 2009-14, CEPII research center.
  2. Richard Kneller & Zhihong Yu, . "Quality Selection, Chinese Exports and Theories of Heterogeneous Firm Trade," Discussion Papers 08/44, University of Nottingham, GEP.
  3. Gabor Bekes & Peter Harasztosi & Balazs Murakozy, 2009. "Firms and Products in International Trade: Data and Patterns for Hungary," IEHAS Discussion Papers 0919, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
  4. Hallak, Juan Carlos & Sivadasan, Jagadeesh, 2008. "Productivity, quality and exporting behavior under minimum quality constraints," MPRA Paper 24146, University Library of Munich, Germany.
  5. David Hummels & Alexandre Skiba, 2004. "Shipping the Good Apples Out? An Empirical Confirmation of the Alchian-Allen Conjecture," Journal of Political Economy, University of Chicago Press, vol. 112(6), pages 1384-1402, December.
  6. Johnson, Robert C., 2012. "Trade and prices with heterogeneous firms," Journal of International Economics, Elsevier, vol. 86(1), pages 43-56.
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