Consumer Taste in Trade

Hylke Vandenbussche, Bee Yan Aw-Roberts and Yi Lee

No 14941, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper documents the importance of consumer taste for the food industry using firm-product level customs data by destination country. We identify consuer taste through the use of a control function approach and estimate it jointly with other demand parameters using a flexible demand specification. We find that, on average, consumer taste explains as much of the variation in export revenue as marginal costs. The contribution of consumer taste to export revenue variation, ranges between 2% to 30% depending on the product category in the food industry. Our results also show that consumer taste decreases in distance but this relationship is non-monotonic.

Keywords: Consumer taste; Quality; Productivity; Exports; Firm-product; Food (search for similar items in EconPapers)
JEL-codes: F12 F14 (search for similar items in EconPapers)
Date: 2020-06
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (7)

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Related works:
Working Paper: Consumer Taste in Trade? (2020)
Working Paper: Consumer taste in trade (2020)
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