EconPapers    
Economics at your fingertips  
 

One way to the top: How services boost the demand for goods

Andrea Ariu, Florian Mayneris () and Mathieu Parenti ()

Journal of International Economics, 2020, vol. 123, issue C

Abstract: In this paper, we take advantage of a uniquely detailed dataset on firm-level exports of both goods and services to show that the provision of services increases firms' manufacturing export values, quantities and prices. The services provision accounts for up to 22.4% of the manufacturing exports of bi-exporters (i.e., the firms that export both goods and services), and 11.8% of overall goods exports from Belgium. To rationalize these findings, we propose a model of oligopolistic competition in which, by supplying services with their goods, firms increase their market share, and hence their market power and markup. This is possible because services act as a demand shifter for firms, thus increasing the perceived quality of their products. Our data provides compelling evidence in this direction. We finally also discuss the relevance of other theoretical rationalizations.

Keywords: Demand complementarities; Goods & services; Oligopoly; Firm-level exports; Quality (search for similar items in EconPapers)
JEL-codes: F10 F14 L80 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0022199619300984
Full text for ScienceDirect subscribers only

Related works:
Working Paper: One Way to the Top: How Services Boost the Demand for Goods (2020) Downloads
Working Paper: One Way to the Top: How Services Boost the Demand for Goods (2018) Downloads
Working Paper: One way to the top: How services boost the demand for goods (2018) Downloads
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:eee:inecon:v:123:y:2020:i:c:s0022199619300984

DOI: 10.1016/j.jinteco.2019.103278

Access Statistics for this article

Journal of International Economics is currently edited by Gourinchas, Pierre-Olivier and Rodríguez-Clare, Andrés

More articles in Journal of International Economics from Elsevier
Bibliographic data for series maintained by Nithya Sathishkumar ().

 
Page updated 2021-04-12
Handle: RePEc:eee:inecon:v:123:y:2020:i:c:s0022199619300984