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Why Do Within Firm-Product Export Prices Differ across Markets?

Author

Listed:
  • Holger Gorg

    (Christian-Albrechts-University Kiel, CEPR)

  • Laszlo Halpern

    (Institute of Economics - Hungarian Academy of Sciences)

  • Balazs Murakozy

    (Institute of Economics - Hungarian Academy of Sciences)

Abstract

In this paper we analyse the relationship between gravity variables and f.o.b. export unit values using Hungarian firm-product-destination data. By taking firm-product level selection into account we show that export unit values increase with distance even for particular firm-product combinations. This cannot be explained by models assuming firm- or even firm-product level selection and constant markups. The differences are important quantitatively; price differences in Hungarian exports between Germany and the US are about 30%. We also show that unit values are positively related to GDP/capita and that there is a weak negative relationship between unit values and market size. We propose two possible explanations: first, firms may export different quality versions of the same product to different markets. Secondly, directly exporting firms may capture part of the markups on transport costs in their f.o.b. prices.

Suggested Citation

  • Holger Gorg & Laszlo Halpern & Balazs Murakozy, 2010. "Why Do Within Firm-Product Export Prices Differ across Markets?," CERS-IE WORKING PAPERS 1003, Institute of Economics, Centre for Economic and Regional Studies.
    • Handle: RePEc:has:discpr:1003
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    export; price; selection; Hungary;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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