Working Paper: NBER ID: w14305
Authors: Richard E. Baldwin; Tadashi Ito
Abstract: Based on the recent trade models of the Heterogeneous Firms Trade (HFT) model and the Quality Heterogeneous Firms Trade (QHFT) model, we classify export goods (at the HS 6-digit level of disaggregation) by quality and price competition. We find a high proportions of quality-competition goods for the major EU countries and lower proportions for Canada, Australia and China. However, the overlap of these quality-competition goods is not large, which suggests that characteristics of export goods are substantially different across countries at the same HS 6-digit code.
Keywords: quality vs price competition; heterogeneous firms trade model
JEL Codes: F14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| type of competition (quality vs. price) (L15) | characteristics of export goods (F10) |
| level of competition based on quality (L15) | type of goods exported (F10) |
| comparative advantage in raw materials (F11) | nature of exports (F10) |
| distance-price relationship (R48) | differentiation between price and quality competition (L15) |
| characteristics of products at the same HS 6-digit level (L67) | overlap of quality competition goods across countries (L15) |
| higher proportion of positive coefficients among EU countries (O52) | prevalence of quality competition (L15) |