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Exporter Price Premia?

Ina C. Jäkel () and Allan Sørensen ()
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Ina C. Jäkel: Department of Economics and Business Economics, Aarhus University, Denmark, Postal: 8210 Aarhus V, Denmark

Economics Working Papers from Department of Economics and Business Economics, Aarhus University

Abstract: This paper provides new evidence on manufacturing firms' output prices: in Denmark, on average, exported varieties are sold at a lower price (i.e. a negative exporter price premium) relative to only domestically sold varieties. This finding stands in sharp contrast to previous studies, which have found positive exporter price premia. We also document that the exporter price premium varies substantially across products (both in terms of sign and magnitude). We show that in a standard heterogeneous firms model with heterogeneity in quality as well as production efficiency there is indeed no clear-cut prediction on the sign of the exporter price premium. However, the model unambiguously predicts a negative exporter price premium in terms of quality-adjusted prices, i.e. prices per unit of quality. This prediction is broadly borne out in the Danish data: while the magnitude of the premium varies across products, its sign is (nearly) always negative.

Keywords: Exporters; Pricing; Exporter price premia; Firm-level data (search for similar items in EconPapers)
JEL-codes: F12 F14 L15 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eur, nep-ind and nep-int
Date: 2017-09-07
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Persistent link: https://EconPapers.repec.org/RePEc:aah:aarhec:2017-07

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