Going Global: Markups and Product Quality in the Chinese Art Market

42 Pages Posted: 22 Oct 2013 Last revised: 6 Aug 2014

See all articles by Jennie Bai

Jennie Bai

Georgetown University - Department of Finance

Jia Guo

Columbia University

Benjamin R. Mandel

Federal Reserve Bank of New York

Date Written: June 21, 2013

Abstract

We analyze two reasons for export prices to be different across markets namely, quality differentiation and variable markups and attempt to parse their relative importance and underlying drivers. To overcome identification issue, we consider a particular industry: Chinese fine art, given its simplicity of the supply-side. Through this lens, we trace the internationalization process of Chinese art since the year 2000. We find strong support for quality sorting into international, as well as substantial markup differences across destinations. Using a structural model of endogenous quality choice, we argue that much of the international quality premium is driven by distribution costs rather than destination preferences for quality.

Keywords: F14, G15

JEL Classification: international prices, quality di

Suggested Citation

Bai, Jennie and Guo, Jia and Mandel, Benjamin R., Going Global: Markups and Product Quality in the Chinese Art Market (June 21, 2013). Georgetown McDonough School of Business Research Paper No. 2456843. Available at SSRN: https://ssrn.com/abstract=2343050 or http://dx.doi.org/10.2139/ssrn.2343050

Jennie Bai (Contact Author)

Georgetown University - Department of Finance ( email )

3700 O Street, NW
Washington, DC 20057
United States

HOME PAGE: http://www.jenniebai.com

Jia Guo

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States

Benjamin R. Mandel

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

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