Quality, Distance and Trade: a Strategic Approach

Bacchiega, Emanuele ; Minniti, Antonio ; Palestini, Arsen (2010) Quality, Distance and Trade: a Strategic Approach. Bologna: Dipartimento di Scienze economiche DSE, p. 28. DOI 10.6092/unibo/amsacta/4524. In: Quaderni - Working Paper DSE (717). ISSN 2282-6483.
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Abstract

This paper contributes to the literature on distance and quality by identifying a firm-based force contributing to explain the observed increase of the quality of shipped goods with the distance of their destination market. This force originates from the influence of distance on firms' strategic behavior when the quality level of goods is a choice variable for them, and complements the ones already proposed in the literature. Our approach differs from the extant literature because it does not rely on technology or preference/income differentials to identify the determinants and drivers of trade flows. Moreover, it allows to clearly disentangle between the price setting and quality choice of firms. We find that distance has an unambiguously positive effect on the average quality of traded goods. Our results suit the empirical evidence on distance and quality and contribute to the analysis of the determinants of firms' trade performance.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Bacchiega, Emanuele
Minniti, Antonio
Palestini, Arsen
Keywords
Product Quality, Destination Market, Strategic Interaction
Subjects
ISSN
2282-6483
DOI
Deposit date
02 Feb 2016 11:43
Last modified
02 Feb 2016 11:43
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