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The variation of export prices across and within firms

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Abstract

This paper uses transaction-level trade data to analyze the differences in export prices across and within Spanish firms exporting manufactures in the 2010–2014 period. The transactional nature of the database uncovers sizable differences in the price that an exporter charges for the same product and destination. These differences are related with the number of goods covered within each product category, the exported quantity per transaction and the number of transactions carried out by firms.

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Notes

  1. Previous studies such as Schott (2004), Hummels and Klenow (2005), Hallak (2006), Khandelwal (2010) and Baldwin and Harrigan (2011) analyzed the variation in export prices using country-product-level data.

  2. As an alternative explanation, the positive relationship between distance and export prices could stem if transport costs were unitary. This is known as the Alchian-Allen conjecture, which predicts a larger relative demand for high-quality varieties in more distant markets. This prediction has been validated empirically by Hummels and Skiba (2004).

  3. The model is similar in spirit to Eckel and Neary (2010), where firms produce a core product, but can produce other varieties with rising marginal costs.

  4. We thank a reviewer for suggesting us this alternative explanation.

  5. An example of an 8-digit product is CN 87120030 Bicycles with ball bearings.

  6. Firms with monthly exports to EU countries below this threshold for a given product are not obliged to report their transactions to the Spanish Tax Revenue Agency.

  7. The required country level data are real GDP, population and bilateral distance. For example, we remove all export transactions with Syria, because we cannot obtain GDP data for this country.

  8. The value of exports lost due to the cleaning process amounts to 9.1% of the initial value of exports.

  9. That is, a firm should have, at least, 4 transactions in the same product, to the same destination, and in the same year.

  10. It is important to stress that, as mentioned above, all CN 8-digit products belonging to the same HS 6-digit root have the same \(ratio_{k}\) value.

  11. We estimate a separate production function for each 4-digit NACE rev 2 industry using all firms with complete information about output, materials, tangible assets and employment. Output is deflated using 4-digit NACE rev 2 industrial prices. Materials and tangible assets are deflated using 2-digit NACE rev 2 input and capital prices, respectively. We use the Stata routine levpet to estimate the production coefficients using intermediate inputs (materials) as control for unobservable productivity shocks.

  12. In bilateral trade gravity models remoteness is denoted as the multilateral index (Anderson and van Wincoop 2003), and is proxied by a destination fixed effect. We cannot follow this procedure because it would preclude the estimation of other destination-specific variables, such as distance, GDP or GDP per capita.

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Acknowledgements

We thank Francisco Olarte for preparing the SABI data used in the empirical analyses. We are grateful to Michele Bernini, participants at 19th Encuentro de Economía Aplicada and 20th Annual LACEA Conference for valuable comments and suggestion. We also thank the Department of Customs and Excise of the Spanish Tax Agency (AEAT) for providing the essential information for this paper. We gratefully acknowledge financial support from the Spanish Ministry of Economy and Competitiveness (MINECO ECO2016-79650-P and ECO2015-68057-R, co-financed with FEDER), the Generalitat Valenciana (GVPROMETEO 2017/052) and the Basque Government Department of Education, Language policy and Culture (IT885-16).

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Authors and Affiliations

  1. Universidad Nebrija, Calle de Santa Cruz de Marcenado, 27, 28015, Madrid, Spain

    Juan de Lucio & Raúl Mínguez

  2. Deusto Business School, University of Deusto, Camino de Mundaiz 50, 20012, Donostia - San Sebastián, Spain

    Asier Minondo

  3. Research affiliate of Instituto Complutense de Estudios Internacionales, Madrid, Spain

    Asier Minondo

  4. Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022, Valencia, Spain

    Francisco Requena

Authors
  1. Juan de Lucio
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  2. Raúl Mínguez
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  3. Asier Minondo
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  4. Francisco Requena
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Corresponding author

Correspondence to Asier Minondo.

Appendix

Appendix

See Table 7.

Table 7 Decomposition of the variance in prices: 2010–2013
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de Lucio, J., Mínguez, R., Minondo, A. et al. The variation of export prices across and within firms. Rev World Econ 154, 327–346 (2018). https://doi.org/10.1007/s10290-018-0311-y

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  • DOI: https://doi.org/10.1007/s10290-018-0311-y

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