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Verti-zontal differentiation in export markets. N°1680, May 2014
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Verti-zontal differentiation in export markets. N°1680, May 2014

Verti-zontal differentiation in export markets. N°1680, May 2014

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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.
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ISSN 1725-2806
ISBN 978-92-899-1088-0
DOI 10.2866/13634
Αριθμός καταλόγου QB-AR-14-054-EN-N
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ISSN 1725-2806 ISBN 978-92-899-1088-0 DOI 10.2866/13634 Αριθμός καταλόγου QB-AR-14-054-EN-N
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