Identifying Exporter's Relative Product Quality Variation From Export Unit Values
- Topics:
- Organization
- Source:
- University of Michigan
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Overview: This paper develops a methodology for decomposing cross-country variation in export unit values into quality versus real price components. The methodology is based on revealed preferences in an environment where consumers have a taste for variety. The authors have derived conditions under which the unobserved export quality ratio of any two exporters is bounded by the observed Paasche and Laspeyres price indexes defined over their common exports to a third country. Then it is shown that price variation not associated with variation in export product quality can be identified using information on countries' trade balance, and introduce a technique for adjusting the bounds to incorporate this information.
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Format: PDF | Size: 329KB | Date: Feb 2005 | Pages: 32
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