Kiel Working Papers, Kiel Institute for World Economics
No 1596:
Why do within firm-product export prices differ across markets?
Holger Görg, László Halpern and Balász Muraközy
Abstract: In this paper we analyze the relationship between gravity
variables and f.o.b. export unit values using Hungarian
firm-product-destination data. By taking firm-product level selection into
account we show that export unit values increase with distance even for
particular firm-product level selection and constant markups. The
differences are important quantitatively; price differences in Hungarian
exports between Germany and the US are about 30%. We also show that unit
values are positively related to GDP/capita and that there is a weak
negative relationship between unit values and market size. We propose two
possible explanations: first, firms may export different quality versions
of the same product to different markets. Secondly, directly exporting
firms may capture part of the markups on transport cots in their f.o.b.
prices
Keywords: export, price, selection, Hungary; (follow links to similar papers)
JEL-Codes: D40,; F12; (follow links to similar papers)
27 pages, February 2010
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