Trade performances, product quality perceptions and the estimation of trade price-elasticities

Matthieu Crozet and Hélène Erkel-Rousse

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Abstract: Traditional trade models ignoring the dimension of product quality generally lead to excessively low trade price elasticities. In this paper, we show that higher estimated trade price elasticities, more in conformity with theory, can be obtained by controlling product quality in trade equations. To do so, we have estimated trade equations including a product quality proxy derived from survey data. Our estimation results, based on panel data for the four main EU member States, confirm the part played by product quality in the estimation of trade price elasticities, at least for traditionally highly differentiated products.

Keywords: Trade performances; trade equations; trade price elasticities; imperfect competition; product differentiation; quality; unit value indices (search for similar items in EconPapers)
Date: 2004
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00096826
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Published in Review of International Economics, 2004, 12 (1), pp.108-129

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Related works:
Journal Article: Trade Performances, Product Quality Perceptions, and the Estimation of Trade Price Elasticities (2004)
Working Paper: Trade performances, product quality perceptions and the estimation of trade price-elasticities (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00096826

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