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Consumer Taste in Trade

Author

Listed:
  • Vandenbussche, Hylke
  • Aw-Roberts, Bee Yan
  • Lee, Yi

Abstract

This paper documents the importance of consumer taste for the food industry using firm-product level customs data by destination country. We identify consuer taste through the use of a control function approach and estimate it jointly with other demand parameters using a flexible demand specification. We find that, on average, consumer taste explains as much of the variation in export revenue as marginal costs. The contribution of consumer taste to export revenue variation, ranges between 2% to 30% depending on the product category in the food industry. Our results also show that consumer taste decreases in distance but this relationship is non-monotonic.

Suggested Citation

  • Vandenbussche, Hylke & Aw-Roberts, Bee Yan & Lee, Yi, 2020. "Consumer Taste in Trade," CEPR Discussion Papers 14941, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:14941
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    Cited by:

    1. Anne C. Wunderlich & Andreas Kohler, 2022. "Data of National Dishes in the Developed and Developing Countries in the World, Their Similarity and Trade Flows," Data, MDPI, vol. 7(11), pages 1-6, October.
    2. Kossi Messanh Agbekponou & Angela Cheptea & Karine Latouche, 2024. "Quality upgrading and position in global value chain," Post-Print hal-04666099, HAL.
    3. Kossi Messanh Agbekponou & Angela Cheptea & Karine Latouche, 2023. "Quality upgrading and position in global value chains: Firm-level evidence from the French agri-food industry," Post-Print hal-04321480, HAL.
    4. Kossi Messanh Agbekponou & Ilaria Fusacchia, 2024. "Positioning and bargaining power in agri-food global value chains," Post-Print hal-04666067, HAL.
    5. Kossi Messanh Agbekponou & Ilaria Fusacchia, 2024. "Positioning and bargaining power in agri-food global value chains," Post-Print hal-04666053, HAL.
    6. Kossi Messanh Agbekponou & Angela Cheptea & Karine Latouche, 2023. "Quality upgrading and position in global value chains: Firm-level evidence from the French agri-food industry," Post-Print hal-04321554, HAL.

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    More about this item

    Keywords

    Consumer taste; Quality; Productivity; Exports; Firm-product; Food;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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