Weight-Based Quality Specialization
33 Pages Posted: 19 Mar 2019
Date Written: February 26, 2019
I document that (i) there is great heterogeneity in the physical weight of traded goods even within narrowly-defined product categories; (ii) heavier goods are more costly to produce; (iii) heavier goods exhibit a systematically higher product appeal or quality; (iv) heavier goods are more costly to transport, and that (v) the cost of transportation increases more rapidly with unit weight than the cost of production. Using a basic model, I demonstrate that these observations entail that advanced economies specialize in the export of heavier goods, whereas geographi- cally distant economies specialize in the export of lighter goods (i.e., weight-based quality specialization). Micro-level trade data strongly support these predictions and suggest that weight-based quality specialization explains a significant portion of the cross-national variation in export prices and export quality.
Keywords: weight, price, quality, transport costs
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