The importance of consumer taste in trade

Bee Yan Aw, Yi Lee and Hylke Vandenbussche

No 7580, CESifo Working Paper Series from CESifo

Abstract: This paper documents the importance of consumer taste in trade flows using Belgian firm-product customs data by destination. We identify consumer taste through the use of a control function approach and estimate it jointly with other demand parameters using a very flexible demand specification. Consumer taste is identified for every trade ow. The results show that taste decreases in distance but this relationship is not monotonic. The contribution of consumer taste to actual export revenue ranges between 1-31% depending on the product category in the food industry. Overall, the demand shifters, taste and product quality explain twice as much of the variation in export revenues than cost.

Keywords: tastes; quality; productivity; exports; firm-product (search for similar items in EconPapers)
JEL-codes: F12 F14 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-agr and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: The Importance of Consumer Taste in Trade (2019)
Working Paper: The importance of consumer taste in trade (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_7580

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