Trade Performances and the Estimation of Price-Elasticities: Quality Matters
Matthieu Crozet () and
Papiers d'Economie MathÃ©matique et Applications from UniversitÃ© PanthÃ©on-Sorbonne (Paris 1)
Traditional trade models ignoring the dimension of product quality generally lead to excessively low trade price elasticities. In this paper, we show that higher estimated trade price elasticities, more in conformity with theory, can be obtained by controlling product quality in trade equations. To do so, we have estimated trade equations including a product quality proxy derived from survey data. Our estimation results, based on panel data for the four main EU member States, confirm the part played by product quality in the estimation of trade price elasticities, at least for traditionally highly differentiated products.
Keywords: TRADE; PRICES; COMPETITION (search for similar items in EconPapers)
JEL-codes: C23 C33 F1 L15 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:fth:pariem:2000.61
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