Trade performances and the estimation of price-elasticities: Quality matters

Matthieu Crozet and Hélène Erkel-Rousse
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Hélène Erkel-Rousse: Ministère de l'Economie des Finances et de l'Industrie - Direction de la Prévision et TEAM - Université Paris 1, CNRS

Cahiers de la Maison des Sciences Economiques from Université Panthéon-Sorbonne (Paris 1)

Abstract: 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 performances; trade equations; trade price elasticities; imperfect competition; product differentiation; quality; unit value indices (search for similar items in EconPapers)
JEL-codes: C23 C33 F1 L15 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2000-04
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Published in Review of International Economics", Wiley, 2004, 12 (1), pp. 108–129

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Related works:
Working Paper: Trade Performances and the Estimation of Price-Elasticities: Quality Matters (2000)
Working Paper: Trade performances and the estimation of price-elasticities: Quality matters (2000)
Working Paper: Trade performances and the estimation of price-elasticities: Quality matters (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:mse:wpsorb:bla00061

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