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Quality Selection, Sectoral Heterogeneity and Chinese Exports

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  • Kneller, Richard
  • Yu, Zhihong

Abstract

Recent models of international trade have identified product quality as an important determinant of bilateral trade flows. In this paper we examine the relationship between the characteristics of the export market and the aggregate quality of products using Chinese data. We find evidence that product unit values vary with standard gravity variables in a different manner across sectors of the Chinese economy and run contrary to earlier findings for the USA. These results are not compatible with existing heterogeneous firm trade models with constant mark-up and the extension to include product quality. We construct a heterogeneous firm trade model with quality differences and spatial price discrimination, and show that the model provides plausible explanations for our empirical finds as well as other existing findings in the literature.

Suggested Citation

  • Kneller, Richard & Yu, Zhihong, 2016. "Quality Selection, Sectoral Heterogeneity and Chinese Exports," Munich Reprints in Economics 43519, University of Munich, Department of Economics.
    • Handle: RePEc:lmu:muenar:43519
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    Cited by:

    1. Dreier, Silas & Liu, Wan-Hsin, 2023. "Technological sophistication made in China? New insights from Germany's evaluation of COVID-19 antigen rapid tests," Kiel Working Papers 2261, Kiel Institute for the World Economy.
    2. Li, Guangzhong & Li, Jie & Zheng, Ying & Egger, Peter H., 2021. "Does property rights protection affect export quality? Evidence from a property law enactment," Journal of Economic Behavior & Organization, Elsevier, vol. 183(C), pages 811-832.
    3. Lei Liu & Kai He & Yi Qiao & Peilin Fu & Qinggang Meng, 2023. "Entrepreneurship and Export Product Quality Improvement," Sustainability, MDPI, vol. 15(16), pages 1-20, August.
    4. Guangzhong Li & Hui Ding & Fansheng Jia, 2024. "Information accessibility and export quality: Evidence from China," Review of International Economics, Wiley Blackwell, vol. 32(2), pages 480-509, May.
    5. Knobel, A. & Kuznetsov, D., 2019. "Patterns of Russian Firms' Export Pricing," Journal of the New Economic Association, New Economic Association, vol. 41(1), pages 100-127.
    6. Baltagi, Badi H. & Egger, Peter H. & Kesina, Michaela, 2017. "Determinants of firm-level domestic sales and exports with spillovers: Evidence from China," Journal of Econometrics, Elsevier, vol. 199(2), pages 184-201.
    7. Hayakawa, Kazunobu & Ito, Tadashi & Mukunoki, Hiroshi, 2022. "Lerner meets Metzler: Tariff pass-through of worldwide trade," Journal of the Japanese and International Economies, Elsevier, vol. 63(C).
    8. Silas Dreier & Wan-Hsin Liu, 2023. "Technological sophistication made in China? – New insights from Germany's evaluation of COVID-19 antigen rapid tests," Economics Bulletin, AccessEcon, vol. 43(4), pages 1555-1564.
    9. Dreier, Silas & Liu, Wan-Hsin, 2023. "Technological sophistication made in China? New insights from Germany's evaluation of COVID-19 antigen rapid tests," KCG Working Papers 30, Kiel Centre for Globalization (KCG).

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