Quality sorting and trade : firm-level evidence for French wine

Matthieu Daniel CROZET, Keith HEAD, Thierry MAYER

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

97 Citations (Scopus)

Abstract

Empirical investigation of the quality interpretation of the Melitz (2003) model of firm heterogeneity and trade has been limited by the lack of direct data on quality. This paper matches firm-level export data with expert assessments of the quality of champagne producers to estimate the key parameters of that model. Quality monotonically increases firm-level prices, the probability of market entry, and export values. The estimated model—which calibrates the relative importance of firm-level quality and idiosyncratic demand—accurately predicts the average quality exported to each country. Simulations show that the data reject the polar alternatives where outcomes are based entirely on either quality or randomness.
Original languageEnglish
Pages (from-to)609-644
Number of pages36
JournalThe Review of Economic Studies
Volume79
Issue number2
DOIs
Publication statusPublished - 1 Apr 2012
Externally publishedYes

Fingerprint

Sorting
Wine
Market entry
Firm heterogeneity
Empirical investigation
Simulation
Relative importance
Price level
Randomness

Bibliographical note

This article also published as Crozet, M., Head, K., and Mayer, T. (2009). Quality sorting and trade: Firm-level evidence for French wine. CEPII Working Paper, (2009-14). France: CEPII. Retrieved from http://www.cepii.fr/PDF_PUB/wp/2009/wp2009-14.pdf

Keywords

  • Champagne
  • Exports
  • Gravity
  • Heterogeneous firms
  • Productivity
  • Vertical differentiation

Cite this

CROZET, Matthieu Daniel ; HEAD, Keith ; MAYER, Thierry. / Quality sorting and trade : firm-level evidence for French wine. In: The Review of Economic Studies. 2012 ; Vol. 79, No. 2. pp. 609-644.
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Quality sorting and trade : firm-level evidence for French wine. / CROZET, Matthieu Daniel; HEAD, Keith; MAYER, Thierry.

In: The Review of Economic Studies, Vol. 79, No. 2, 01.04.2012, p. 609-644.

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

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