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Export Prices Across Firms and Destinations

  • Kalina Manova
  • Zhiwei Zhang

This paper establishes six stylized facts about firms' export prices using detailed customs data on the universe of Chinese trade flows. First, across firms selling a given product, exporters that charge higher prices earn greater revenues in each destination, have bigger worldwide sales, and enter more markets. Second, firms that export more, that enter more markets and that charge higher export prices import more expensive inputs. Third, across destinations within a firm-product, firms set higher prices in richer, larger, bilaterally more distant and overall less remote countries. Fourth, across destinations within a firm-product, firms earn bigger revenues in markets where they set higher prices. Fifth, across firms within a product, exporters with more destinations offer a wider range of export prices. Finally, firms that export more, that enter more markets and that offer a wider range of export prices pay a wider range of input prices and source inputs from more origin countries. We propose that trade models should incorporate two features to rationalize these patterns in the data: more successful exporters use higher-quality inputs to produce higher-quality goods (stylized facts 1 and 2), and firms vary the quality of their products across destinations by using inputs of different quality levels (stylized facts 3, 4, 5 and 6).

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 15342.

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Date of creation: Sep 2009
Publication status: published as Export Prices across Firms and Destinations Quarterly Journal of Economics 127 (2012), p.379-436. Updated version of NBER Working Paper 15342. (with Zhiwei Zhang)
Handle: RePEc:nbr:nberwo:15342
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