Consumer Taste in Trade?

Bee Yan Aw-Roberts, Yi Lee and Hylke Vandenbussche

No 664290, Working Papers of Department of Economics, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven

Abstract: This paper documents the importance of consumer taste for the food industry using firm-product level customs data by destination country. We identify consuer taste through the use of a control function approach and estimate it jointly with other demand parameters using a flexible demand specification. We find that, on average, consumer taste explains as much of the variation in export revenue as marginal costs. The contribution of consumer taste to export revenue variation, ranges between 2% to 30% depending on the product category in the food industry. Our results also show that consumer taste decreases in distance but this relationship is non-monotonic.

Keywords: consumer taste; exports; firm-product; food; productivity; quality; JEL F12; JEL F14 (search for similar items in EconPapers)
Date: 2020-06-07
New Economics Papers: this item is included in nep-int
Note: paper number 14941
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Published in CEPR Discussion Paper, pages 1-49

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Related works:
Working Paper: Consumer Taste in Trade (2020)
Working Paper: Consumer taste in trade (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:ete:ceswps:664290

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