China’s competition and the export price strategies of developed countries
This paper analyzes the impact of Chinese competition on developed countries export prices, with a focus on Italy. After a theoretical discussion of the channels affecting export prices in presence of competitors from low income countries, we estimate the pricing behavior of two major manufacturing sectors, consumer goods and machinery, distinguishing destination markets according to their income level. Results show that export competition from China has affected Italian price strategies over the period 2000-08, in an idiosyncratic way according to the income level of importers, sector and technology level of products exported. Contrary to what observed for other high-income countries, we find that Italy has followed a very specific strategy to face Chinese competition. Instead of changing “between sector”, moving up to the technology ladder, Italy has kept its specialization in traditional sectors and has upgraded the quality of its low-tech and laborintensive products, when in direct competition with Chinese ones. For higher technology products, on the other hand, it has adjusted prices downward to reduce Chinese competitive pressure, especially in segments where it does not hold a comparative advantage, while it has fostered differentiation only for some niche products within the sectors with higher specialization.
|Date of creation:||Dec 2012|
|Date of revision:|
|Contact details of provider:|| |
|Order Information:|| Postal: FIW Project Office Austrian Institute of Economic Research Arsenal Objekt 20 A-1030 Vienna|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Martin, Julien & Méjean, Isabelle, 2011.
"Low-Wage Countries' Competition, Reallocation Across Firms and the Quality Content of Exports,"
CEPR Discussion Papers
8231, C.E.P.R. Discussion Papers.
- Julien Martin & Isabelle Méjean, 2012. "Low-Wage Countries’ Competition, Reallocation Across Firms and the Quality Content of Exports," Working Papers 2012-04, CEPII research center.
- Julien Martin & Isabelle Méjean, 2011. "Low-wage countries' competition, reallocation across firms and the quality content of exports," PSE - G-MOND WORKING PAPERS halshs-00962485, HAL.
- Michele Di Maio & Federico Tamagni, 2007.
"The Evolution of the World Trade and the Italian ‘Anomaly’: A New Look,"
Development Working Papers
227, Centro Studi Luca d'Agliano, University of Milano.
- Michele Di Maio & Federico Tamagni, 2008. "The Evolution of World Export Sophistication and the Italian Trade Anomaly," Rivista di Politica Economica, SIPI Spa, vol. 98(1), pages 135-174, January-F.
- Michele Di Maio & Federico Tamagni, 2006. "The evolution of world trade and the Italian â€˜anomaly': a new look," Working Papers 39-2006, Macerata University, Department of Finance and Economic Sciences, revised Oct 2008.
- Joao Pedro Azevedo, 2004. "GRQREG: Stata module to graph the coefficients of a quantile regression," Statistical Software Components S437001, Boston College Department of Economics, revised 17 Mar 2011.
- Fu, Xiaolan & Kaplinsky, Raphael & Zhang, Jing, 2012. "The Impact of China on Low and Middle Income Countries’ Export Prices in Industrial-Country Markets," World Development, Elsevier, vol. 40(8), pages 1483-1496.
- David Hummels & Peter J. Klenow, 2005. "The Variety and Quality of a Nation's Exports," American Economic Review, American Economic Association, vol. 95(3), pages 704-723, June.
- Alberto Felettigh & Stefano Federico, 2011.
"Measuring the price elasticity of import demand in the destination markets of italian exports,"
ECONOMIA E POLITICA INDUSTRIALE,
FrancoAngeli Editore, vol. 2011(1), pages 127-162.
- Alberto Felettigh & Stefano Federico, 2010. "Measuring the price elasticity of import demand in the destination markets of Italian export," Temi di discussione (Economic working papers) 776, Bank of Italy, Economic Research and International Relations Area.
- Guillaume Gaulier & Soledad Zignago, 2010.
"BACI: International Trade Database at the Product-Level. The 1994-2007 Version,"
2010-23, CEPII research center.
- Gaulier, Guillaume & Zignago, Soledad, 2004. "Notes on BACI (analytical database of international trade). 1989-2002 version," MPRA Paper 32401, University Library of Munich, Germany.
- Hylke VANDENBUSSCHE & Francesco DI COMITE & Laura ROVEGNO & Christian VIEGELAHN, 2011.
"Moving up the Quality ladder? EU-China Trade Dynamics in Clothing,"
Discussion Papers (IRES - Institut de Recherches Economiques et Sociales)
2011047, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
- VANDENBUSSCHE, Hylke & DI COMITE, Francesco & ROVEGNO, Laura & VIEGELAHN, Christian, 2011. "Moving up the quality ladder? EU-China trade dynamics in clothing," CORE Discussion Papers 2011067, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Di Comite, Francesco & Rovegno, Laura & Vandenbussche, Hylke & Viegelahn, Christian, 2011. "Moving up the Quality ladder? EU-China Trade Dynamics in Clothing," CEPR Discussion Papers 8725, C.E.P.R. Discussion Papers.
- Hylke Vandenbussche & Francesco Di Comite & Laura Rovegno & Christian Viegelahn, 2011. "Moving up the Quality ladder? EU-China Trade Dynamics in Clothing," LICOS Discussion Papers 30111, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
- Sanjaya Lall and Manuel Albaladejo (QEH), .
"China’s Competitive Performance: A Threat To East Asian Manufactured Exports?,"
QEH Working Papers
qehwps110, Queen Elizabeth House, University of Oxford.
- Lall, Sanjaya & Albaladejo, Manuel, 2004. "China's Competitive Performance: A Threat to East Asian Manufactured Exports?," World Development, Elsevier, vol. 32(9), pages 1441-1466, September.
- Ricotta, Fernanda & Mannarino, Lidia & Pupo, Valeria & Succurro, Marianna, 2008. "Export quality in the machinery sector: Some evidence from main competitors," MPRA Paper 12677, University Library of Munich, Germany.
- Filip Abraham & Jan Van Hove, 2011. "Chinese competition in OECD markets: impact on the export position and export strategy of OECD countries," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 14(2), pages 151-170.
- Jörg Mayer, 2003.
"The Fallacy Of Composition: A Review Of The Literature,"
UNCTAD Discussion Papers
166, United Nations Conference on Trade and Development.
- Jörg Mayer, 2002. "The Fallacy of Composition: A Review of the Literature," The World Economy, Wiley Blackwell, vol. 25(6), pages 875-894, 06.
- Raphael Kaplinsky & Amelia U. Santos-Paulino, 2006. "A disaggregated analysis of EU imports: the implications for the study of patterns of trade and technology," Cambridge Journal of Economics, Oxford University Press, vol. 30(4), pages 587-611, July.
- repec:pit:wpaper:391 is not listed on IDEAS
- Thierry Mayer & Soledad Zignago, 2011.
"Notes on CEPII’s distances measures: The GeoDist database,"
2011-25, CEPII research center.
- Robert Koopman & Zhi Wang & Shang-Jin Wei, 2008. "How Much of Chinese Exports is Really Made In China? Assessing Domestic Value-Added When Processing Trade is Pervasive," NBER Working Papers 14109, National Bureau of Economic Research, Inc.
- Filip Abraham & Jan Van Hove, 2010. "Can Belgian firms cope with the Chinese dragon and the Asian tigers ? The export performance of multi-product firms on foreign markets," Working Paper Research 204, National Bank of Belgium.
- Julien Martin & Isabelle Méjean, 2011. "Low-wage countries' competition, reallocation across firms and the quality content of exports," Working Papers halshs-00962485, HAL.
- Antoine Berthou & Charlotte Emlinger, 2011.
"The Trade Unit Values database,"
CEPII research center, issue 128, pages 97–117.
- Matteo Bugamelli & Silvia Fabiani & Enrico Sette, 2010. "The pro-competitive effect of imports from China: an analysis of firm-level price data," Temi di discussione (Economic working papers) 737, Bank of Italy, Economic Research and International Relations Area.
When requesting a correction, please mention this item's handle: RePEc:wsr:wpaper:y:2012:i:102. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.