Trade Performances, Product Quality Perceptions, and the Estimation of Trade Price Elasticities

22 Pages Posted: 2 Apr 2004

See all articles by Matthieu Crozet

Matthieu Crozet

Université Paris I Panthéon-Sorbonne - TEAM

Helene Erkel-Rousse

National Institute of Statistics and Economic Studies (INSEE)

Abstract

Traditional trade models ignoring the dimension of product quality generally lead to excessively low trade price elasticities. This paper estimates import market share equations including a quality image proxy derived from survey data. The estimation results, based on panel data for the four main EU member states, confirm the part played by product quality perceptions in the estimation of trade price elasticities, at least for highly differentiated products. Introducing the quality image proxy into the models leads to a significant increase in the price elasticities, which thus become superior to unity, in conformity with theoretical elasticities of substitution.

Suggested Citation

Crozet, Matthieu and Erkel-Rousse, Helene, Trade Performances, Product Quality Perceptions, and the Estimation of Trade Price Elasticities. Review of International Economics, Vol. 12, pp. 108-129, February 2004. Available at SSRN: https://ssrn.com/abstract=513993

Matthieu Crozet (Contact Author)

Université Paris I Panthéon-Sorbonne - TEAM ( email )

106-112 boulevard de l'hôpital
Cedex 13 Paris, P75647
France
+33 1 4407 8267 (Phone)
+33 1 4407 8267 (Fax)

Helene Erkel-Rousse

National Institute of Statistics and Economic Studies (INSEE) ( email )

18, Boulevard Adolphe-Pinard
75675 Paris Cedex 14
France

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