Decomposing Firm-Product Appeal: How important is Consumer Taste?

Hylke Vandenbussche, Bee Yan Aw-Roberts and Yi Lee

No 12707, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We develop and structurally estimate a trade model in order to identify the importance of consumer taste for exporters. The model separates taste from quality and productivity (TFPQ) at the fi rm-product level. Export data by destination countries allow us to identify the level of taste from consumer heterogeneity across destinations. We decompose export revenue into the contribution of taste, quality and costs. We fi nd that taste is very important and explains about 50% of the variation in export revenue. Productivity (TFPQ) differences between fi rm-products become more prominent than taste in explaining export success only when the cost elasticity of improving quality is high.

Keywords: Taste; Quality; Productivity; Exports; Fi rm-product (search for similar items in EconPapers)
JEL-codes: F12 F14 (search for similar items in EconPapers)
Date: 2018-02
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Decomposing firm-product appeal: how important is consumer taste? (2018)
Working Paper: Decomposing firm-product appeal: how important is consumer taste? (2018)
Working Paper: Decomposing firm-product appeal:How important is consumer taste ? (2018)
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