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

Author

Listed:
  • Matthieu Crozet

    (TEAM - Théories et Applications en Microéconomie et Macroéconomie - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

  • Hélène Erkel-Rousse

    (DP - Direction de la Prévision - Ministère de l'Economie des Finances et de l'Industrie, TEAM - Théories et Applications en Microéconomie et Macroéconomie - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

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.

Suggested Citation

  • Matthieu Crozet & Hélène Erkel-Rousse, 2000. "Trade performances and the estimation of price-elasticities: Quality matters," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-03727787, HAL.
    • Handle: RePEc:hal:cesptp:halshs-03727787
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-03727787
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    Citations

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    Cited by:

    1. Hélène Erkel‐Rousse & Daniel Mirza, 2002. "Import price elasticities: reconsidering the evidence," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 35(2), pages 282-306, May.
    2. Keith Head & Thierry Mayer, 2002. "Effet frontière, intégration économique et “Forteresse Europe”," Economie & Prévision, La Documentation Française, vol. 0(1), pages 71-92.
    3. Iheb FRIJA, 2008. "La compétitivité de l'industrie d'habillement tunisienne. Atouts et limites (The tunisian clothing industry competitiveness : assets and limits)," Working Papers 200, Laboratoire de Recherche sur l'Industrie et l'Innovation. ULCO / Research Unit on Industry and Innovation.
    4. repec:hal:spmain:info:hdl:2441/c8dmi8nm4pdjkuc9g8o1h74in is not listed on IDEAS
    5. Jose Luis Moraga-Gonzalez & Jean-Marie Viaene, 2003. "An Example of Procompetitive Trade Policies," Working Papers 504, Research Seminar in International Economics, University of Michigan.
    6. Hélène Erkel-Rousse & Françoise Le Gallo, 2002. "Compétitivités prix et qualité dans le commerce international : une analyse empirique des échanges de 12 pays de l’OCDE," Économie et Prévision, Programme National Persée, vol. 152(1), pages 93-113.
    7. Lord, Montague, 2004. "Partial-Equilibrium and Industrial-Shift Analysis of the U.S.–Colombia FTA," MPRA Paper 50635, University Library of Munich, Germany.
    8. repec:spo:wpmain:info:hdl:2441/c8dmi8nm4pdjkuc9g8o1h74in is not listed on IDEAS
    9. Moraga-Gonzalez, Jose Luis & Viaene, Jean-Marie, 2005. "Trade policy and quality leadership in transition economies," European Economic Review, Elsevier, vol. 49(2), pages 359-385, February.
    10. Lord, Montague, 2000. "Viet Nam: Small Scale Technical assistance for Capacity Building of Ministry of Finance to Support Tariff, Industry and Subsidy Analysis for the WTO Accession," MPRA Paper 41158, University Library of Munich, Germany.

    More about this item

    Keywords

    trade performances; trade equations; trade price elasticities; imperfect competition; product differentiation; quality; unit value indices; commerce international; équation de commerce; élasticité-prix; concurrence imparfaite; différentiation des produits; qualité; indices de valeur unitaire;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F1 - International Economics - - Trade
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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