Trade performances, product quality perceptions, and the estimation of trade price-elasticities

Matthieu Daniel CROZET, Hélène ERKEL-ROUSSE

Research output: Journal PublicationsJournal Article (refereed)

13 Citations (Scopus)

Abstract

Traditional trade models ignoring the dimension of product quality generally lead to excessively low trade price elasticities. This paper estimates import market share equations including a quality image proxy derived from survey data. The estimation results, based on panel data for the four main EU member states, confirm the part played by product quality perceptions in the estimation of trade price elasticities, at least for highly differentiated products. Introducing the quality image proxy into the models leads to a significant increase in the price elasticities, which thus become superior to unity, in conformity with theoretical elasticities of substitution.
Original languageEnglish
Pages (from-to)108-129
Number of pages22
JournalReview of International Economics
Volume12
Issue number1
DOIs
Publication statusPublished - 1 Feb 2004
Externally publishedYes

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trade performance
price elasticity
elasticity
performance
EU member state
panel data
market share
conformity
substitution
import
market
product
price

Cite this

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abstract = "Traditional trade models ignoring the dimension of product quality generally lead to excessively low trade price elasticities. This paper estimates import market share equations including a quality image proxy derived from survey data. The estimation results, based on panel data for the four main EU member states, confirm the part played by product quality perceptions in the estimation of trade price elasticities, at least for highly differentiated products. Introducing the quality image proxy into the models leads to a significant increase in the price elasticities, which thus become superior to unity, in conformity with theoretical elasticities of substitution.",
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Trade performances, product quality perceptions, and the estimation of trade price-elasticities. / CROZET, Matthieu Daniel; ERKEL-ROUSSE, Hélène.

In: Review of International Economics, Vol. 12, No. 1, 01.02.2004, p. 108-129.

Research output: Journal PublicationsJournal Article (refereed)

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AU - CROZET, Matthieu Daniel

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N2 - Traditional trade models ignoring the dimension of product quality generally lead to excessively low trade price elasticities. This paper estimates import market share equations including a quality image proxy derived from survey data. The estimation results, based on panel data for the four main EU member states, confirm the part played by product quality perceptions in the estimation of trade price elasticities, at least for highly differentiated products. Introducing the quality image proxy into the models leads to a significant increase in the price elasticities, which thus become superior to unity, in conformity with theoretical elasticities of substitution.

AB - Traditional trade models ignoring the dimension of product quality generally lead to excessively low trade price elasticities. This paper estimates import market share equations including a quality image proxy derived from survey data. The estimation results, based on panel data for the four main EU member states, confirm the part played by product quality perceptions in the estimation of trade price elasticities, at least for highly differentiated products. Introducing the quality image proxy into the models leads to a significant increase in the price elasticities, which thus become superior to unity, in conformity with theoretical elasticities of substitution.

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