Shipping the Good Apples Out? An Empirical Confirmation of the Alchian-Allen Conjecture

28 Pages Posted: 21 Jun 2002 Last revised: 29 Aug 2021

See all articles by David L. Hummels

David L. Hummels

Purdue University - Department of Economics; National Bureau of Economic Research (NBER)

Alexandre M. Skiba

University of Kansas - School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: June 2002

Abstract

We model demand for quality differentiated goods to derive a relationship between trade costs and the quality composition of trade. Detailed data on traded goods' prices, quantities and shipping costs for many importers and exporters are used to test these predictions. These data provide a strong rejection of the iceberg assumption on transportation costs and a strong confirmation of the classical Alchian Allen hypothesis. Within a narrowly defined commodity classification, exporters charge destination-varying prices that co-vary positively with shipping costs and negatively with tariffs. Shipping costs operate as a quantitative restriction similar to quotas.

Suggested Citation

Hummels, David L. and Skiba, Alexandre (Sasha) Mykolajovych, Shipping the Good Apples Out? An Empirical Confirmation of the Alchian-Allen Conjecture (June 2002). NBER Working Paper No. w9023, Available at SSRN: https://ssrn.com/abstract=316802

David L. Hummels (Contact Author)

Purdue University - Department of Economics ( email )

West Lafayette, IN 47907-1310
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Alexandre (Sasha) Mykolajovych Skiba

University of Kansas - School of Business ( email )

1300 Sunnyside Avenue
Lawrence, KS 66045
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
49
Abstract Views
1,298
PlumX Metrics