DP6952 Quality Competition Versus Price Competition Goods: An Empirical Classification

Author(s): Richard Baldwin, Tadashi Ito
Publication Date: September 2008
Keyword(s): heterogeneous firms trade model, Quality vs Price competition
JEL(s): F14
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=6952

Based on the recent trade models of the Heterogeneous Firms Trade (HFT) model and the Quality Heterogeneous Firms Trade (QHFT) model, we classify export goods (at the HS 6-digit level of disaggregation) by quality and price competition. We find a high proportions of quality-competition goods for the major EU countries and lower proportions for Canada, Australia and China. However, the overlap of these quality-competition goods is not large, which suggests that characteristics of export goods are substantially different across countries at the same HS 6-digit code.