Learning from Neighbors and Differentiating Export Quality

Qiming Liu, Bin Qiu, Terence Edwards and Bo Gao

China & World Economy, 2024, vol. 32, issue 4, 1-32

Abstract: This paper explores how learning from neighboring firms affects new exporters' product quality. It builds a Bayesian learning model to study how new exporters revise their prior beliefs about foreign customers' preferences for product quality from neighboring pioneering exporters. The model shows that a new exporter improves its product quality when it receives a positive quality‐preference signal from its neighbors. The learning process of a firm depends on the number of neighbors, the level and heterogeneity of their export quality, and its own prior knowledge of the market. Highly disaggregated firm–product–country level transaction data provide robust evidence for this. The results also suggest that the impact of neighboring signals on a new exporter's quality can be channeled through the importation of high‐quality intermediate inputs and more fixed investment. Learning effects are heterogeneous across firms and learning can influence other aspects of export performance.

Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/cwe.12539

Related works:
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:bla:chinae:v:32:y:2024:i:4:p:1-32

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1671-2234

Access Statistics for this article

China & World Economy is currently edited by Yongding Yu

More articles in China & World Economy from Institute of World Economics and Politics, Chinese Academy of Social Sciences Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().