Distribution Costs, Product Quality, and Cross-Country Income Differences

Bernardo Blum, Sebastian Claro, Kunal Dasgupta and Ignatius Horstmann

Working Papers from University of Toronto, Department of Economics

Abstract: We show that the efficiency of countries’ distribution systems help determine the quality of goods produced and traded, i.e., is a source of comparative advantage in quality. Using the structure of our model and shipment-level imports data from Chile, we estimate the efficiency of trade distribution systems for a sample of 86 countries. We find that the implied efficiency of distribution systems vary widely across countries, with the 90th percentile value of per- shipment costs being almost 150 percent larger than the 10th percentile value. After calibrating the parameters of the model, we show that differences in the efficiency of distribution systems can generate more than half of the observed (in the data) elasticity of export prices with respect to per capita income. Moreover, the welfare effects of reducing inefficiencies in distribution systems via quality upgrading are larger than the effects via trade volumes.

Keywords: Distribution cost; per-shipment cost; quality; comparative advantage (search for similar items in EconPapers)
JEL-codes: F10 F12 (search for similar items in EconPapers)
Pages: Unknown pages
Date: 2016-03-11
New Economics Papers: this item is included in nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.economics.utoronto.ca/public/workingPapers/tecipa-556.pdf Main Text (application/pdf)

Related works:
Working Paper: Distribution Costs, Product Quality, and Cross-Country Income Differences (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tor:tecipa:tecipa-556

Access Statistics for this paper

More papers in Working Papers from University of Toronto, Department of Economics 150 St. George Street, Toronto, Ontario.
Bibliographic data for series maintained by RePEc Maintainer ().