Decomposing firm-product appeal: how important is consumer taste?

Bee Yan Aw, Yi Lee and Hylke Vandenbussche

No 617036, Working Papers of Department of Economics, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven

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 firm-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 find that taste is very important and explains about 50% of the variation in export revenue. Productivity (TFPQ) differences between firm-products become more prominent than taste in explaining export success only when the cost elasticity of improving quality is high

Date: 2018
New Economics Papers: this item is included in nep-int
Note: paper number DPS 18.03
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Published in Department of Economics Discussion paper series,, pages 1-60

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https://lirias.kuleuven.be/retrieve/500401 (application/pdf)

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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Persistent link: https://EconPapers.repec.org/RePEc:ete:ceswps:617036

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