Price, quality and trade costs in the food sector

Abstract

a b s t r a c tRecent developments in international trade theory have placed considerable and growing emphasis on the quality of the exported products, showing that it affects both the direction of trade and the countries' export performances. However, as quality is unobservable, a measurement problem clearly emerges. In this paper we review and apply some of the most recent methods developed in the international trade literature to estimate quality of traded products. We focus on the food sector, where the growing attention on quality and safety issues is leading to an increase in the demand for high quality products. In the first part of our empirical analysis, we investigate the properties of the estimated qualities, drawing some interesting results. In particular we find that, in contrast with what is often assumed in the literature, quality and prices are imperfectly correlated. The second empirical section is dedicated to the study of the relationship between price vs. quality and trade costs. What emerges is that, interestingly, the price and the quality of food exports are influenced differently by ad valorem and specific trade costs. Moreover, the magnitude of this relationship changes according to the level of product differentiation.

Trade, price and quality upgrading effects of agri-food standards

“…17 Different mechanisms may be at play depending on the type of bilateral tariff applied by the importing country, e.g., specific tariffs are positively correlated with prices and quality while ad valorem tariffs are negatively correlated with prices and quality. See Curzi and Pacca (2015) for an empirical test of these two mechanisms in the food sector. Our findings here are a mix of the two mechanisms, i.e., tariffs affect prices positively and quality negatively.…”

“…While this method was originally applied at the firm-product-country-year level, subsequent applications have also been done at the product-country-year level, see e.g.,Curzi and Pacca (2015),Breinlich et al (2016). The limitation, however, is that different producers or firms may produce different qualities.…”

Contracting Institutions, Agro‐food Trade and Product Quality

“…Our focus is on agro‐food exports to 15 old members states in the European Union (EU‐15). This choice is motivated by the fact that this destination market is commonly perceived as one of the most demanding as regards food quality standards which need to be met by agro‐food exporters (Grunert, ; Curzi and Pacca, ). One may therefore assume that product quality might be of special importance for potential exporters wishing to achieve success in this particular destination.…”

A Terceira Onda Do Café Em Minas Gerais

“…Embora pouco exploradas nos estudos de organização industrial (SAITONE; SEXTON, 2010), a diferenciação de produto e qualidade no sistema alimentar tiveram seu interesse exacerbado pelo aumento significativo do comércio internacional de produtos agrícolas, que é estimulado pela redução de barreiras comerciais. Isso permite, por sua vez, que os consumidores tenham maior acesso a uma maior variedade de produtos diferenciados e provenientes de diversas origens (CURZI;PACCA, 2015).…”