Speaker: James Harrigan, University of Virginia and NBER, joint with Victor Shlychkov,Columbia University
Abstract: Economists have documented systematic heterogeneity in the prices that are charged for the same traded products. Starting with Schott (2004), it has been established that even within narrowly defined product categories, average prices differ systematically with the the characteristics of importing and exporting countries. There have been only a few studies that examine export price variation across markets using firm-level data Our paper is the first to use U.S. firm-level data to look at export pricing, and we establish some new facts:
1) After controlling for selection into exporting using a two-step Tobit estimator, we find that exporting firms do not charge systematically different prices as a function of destination market characteristics.
2) The product-level correlation between export prices and destination market characteristics found by Baldwin and Harrigan (2011) is due to a selection effect, where firms that charge higher prices are more likely to select into tougher markets.
3) Within product categories, firms that are more productive and skill-intensive charge higher prices, while more capital intensive firms charge lower prices.
We show that these facts are supportive of models where more successful firms produce higher quality goods using more skill-intensive techniques.