One Way to the Top: How Services Boost the Demand for Goods

Andrea Ariu, Florian Mayneris and Mathieu Parenti ()

ULB Institutional Repository from ULB -- Universite Libre de Bruxelles

Abstract: In this paper, we take advantage of a uniquely detailed dataset on firm-level exports of both goods and services to show that the provision of services increases firms' manufacturing export values, quantities and prices. The services provision accounts for up to 22.4% of the manufacturing exports of bi-exporters (i.e. the firms that export both goods and services), and 11.8% of overall goods exports from Belgium. To rationalize these findings, we propose a model of oligopolistic competition in which, by supplying services with their goods, firms increase their market share, and hence their market power and markup. This is possible because services act as a demand shifter for firms, thus increasing the perceived quality of their products. Our data provides compelling evidence in this direction. We finally also discuss the relevance of other theoretical rationalizations.

Keywords: Demand complementarities; Firm-level exports; Goods & services; Oligopoly; Quality (search for similar items in EconPapers)
Date: 2020-03
Note: SCOPUS: ar.j
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (25)

Published in: Journal of international economics (2020) v.123

Downloads: (external link)
https://dipot.ulb.ac.be/dspace/bitstream/2013/295592/3/AMP_2019_09_23.pdf Full text for the whole work, or for a work part (application/pdf)

Related works:
Journal Article: One way to the top: How services boost the demand for goods (2020)
Working Paper: One Way to the Top: How Services Boost the Demand for Goods (2018)
Working Paper: One way to the top: How services boost the demand for goods (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ulb:ulbeco:2013/295592

Ordering information: This working paper can be ordered from
http://hdl.handle.ne ... lb.ac.be:2013/295592

Access Statistics for this paper

More papers in ULB Institutional Repository from ULB -- Universite Libre de Bruxelles Contact information at EDIRC.
Bibliographic data for series maintained by Benoit Pauwels ().