Markups, Quality, and Trade Costs

Natalie Chen and Luciana Juvenal

No 14204, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We investigate theoretically and empirically how exporters adjust their markups across destinations depending on bilateral distance, tariffs, and the quality of their exports. Under the assumption that trade costs are both ad valorem and per unit, our model predicts that markups rise with distance and fall with tariffs, but these effects are heterogeneous and are smaller in magnitude for higher quality exports. We find strong support for the predictions of the model using a unique data set of Argentinean firm-level wine exports combined with experts wine ratings as a measure of quality.

Keywords: Distance; Export unit values; Heterogeneity; Markups; Quality; Tariff; Trade costs; Wine (search for similar items in EconPapers)
JEL-codes: F12 F14 F31 (search for similar items in EconPapers)
Date: 2019-12
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 (4)

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Related works:
Journal Article: Markups, quality, and trade costs (2022)
Working Paper: Markups, Quality, and Trade Costs (2020)
Working Paper: Markups, Quality, and Trade Costs (2019)
Working Paper: Markups, Quality, and Trade Costs (2019)
Working Paper: Markups, Quality, and Trade Costs (2019)
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