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Price, Quality, and International Agricultural Trade

  • Darian Woods


    (The Treasury)

  • Andrew Coleman


    (Motu Economic and Public Policy Research and the Treasury)

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    The average value of a particular class of agricultural exports varies widely across different destinations. This raises the question: in the event of a supply shock, such as the implementation of the Emissions Trading Scheme, can farmers offset higher costs by raising their average prices by contracting exports to lower value destinations? If the difference in value reflects different prices because producers have market power, the answer will be “yes”. If the difference in value reflects differences in the quality of goods exported to different destinations, the answer is “no.” This paper use a variety of trade data and techniques to examine which explanation is most likely to be relevant. While the answers are not definitive, there is little support for the hypothesis that exports are curtailed.

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    Paper provided by Motu Economic and Public Policy Research in its series Working Papers with number 12_08.

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    Length: 41 pages
    Date of creation: Jul 2012
    Date of revision:
    Handle: RePEc:mtu:wpaper:12_08
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    1. Robert C. Feenstra & Robert E. Lipsey & Haiyan Deng & Alyson C. Ma & Hengyong Mo, 2005. "World Trade Flows: 1962-2000," NBER Working Papers 11040, National Bureau of Economic Research, Inc.
    2. Richard Fabling & Arthur Grimes & Lynda Sanderson, 2012. "Whatever next? Export market choices of New Zealand firms," Papers in Regional Science, Wiley Blackwell, vol. 91(1), pages 137-159, 03.
    3. Aiginger, Karl, 1997. "The Use of Unit Values to Discriminate between Price and Quality Competition," Cambridge Journal of Economics, Oxford University Press, vol. 21(5), pages 571-92, September.
    4. Juan Carlos Hallak & Peter K. Schott, 2008. "Estimating Cross-Country Differences in Product Quality," NBER Working Papers 13807, National Bureau of Economic Research, Inc.
    5. Hallak, Juan Carlos, 2006. "Product quality and the direction of trade," Journal of International Economics, Elsevier, vol. 68(1), pages 238-265, January.
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