Markups, quality, and transport costs

Julien Martin

European Economic Review, 2012, vol. 56, issue 4, 777-791

Abstract: This paper provides new evidence on trade prices based on firm-level data from France. It shows that firms charge higher free-on-board (net of transportation costs, hereafter noted as fob) unit values on exports to more distant countries. This finding holds within firms and products, and across destinations. The price premium paid by distant consumers is due to firms charging higher fob prices, and to higher transportation costs. A simple decomposition of the elasticity of import prices to distance shows that, after a fall in transport costs, almost 80% of the decline in import prices enjoyed by consumers is due to firms charging lower fob prices. This suggests a new channel through which changes in transport costs may affect welfare.

Keywords: Firm-level data; Free-on-board unit values; Welfare (search for similar items in EconPapers)
JEL-codes: F10 F14 L11 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (137)

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Working Paper: Markups, Quality and Transport Costs (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:56:y:2012:i:4:p:777-791

DOI: 10.1016/j.euroecorev.2012.02.004

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