Title: Verti-zontal differentiation in export markets
Authors: DI COMITE FRANCESCOTHISSE Jacques-FrançoisVANDENBUSSCHE Hylke
Citation: JOURNAL OF INTERNATIONAL ECONOMICS vol. 93 no. 1 p. 50-66
Publisher: ELSEVIER SCIENCE BV
Publication Year: 2014
JRC N°: JRC101160
ISSN: 0022-1996
URI: http://www.sciencedirect.com/science/article/pii/S0022199614000130
http://publications.jrc.ec.europa.eu/repository/handle/JRC101160
DOI: 10.1016/j.jinteco.2014.01.010
Type: Articles in periodicals and books
Abstract: Many trade models of monopolistic competition identify cost efficiency as the main determinant of firm performance in export markets. To date, the analysis of demand factors has received much less attention. We propose a new model where consumer preferences are asymmetric across varieties and heterogeneous across countries. The model generates new predictions and allows for an identification of horizontal differentiation (taste) clearly distinguished from vertical differentiation (quality). Data patterns observed in Belgian firm–product level exports by destination are congruent with the predictions and seem to warrant a richer modelling of consumer demand.
JRC Directorate:Growth and Innovation

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