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DESCRIPTION:Joel Rodrigue on&nbsp\;Price\nand Quality Dynamics in Export Ma
 rketsJoel Rodrigue\,Vanderbilt University (joint Yong Tan)This\npaper inve
 stigates the evolution of firm-level price and quality decisions in\nexpor
 t markets.We\ndevelop a model of heterogeneous firms which endogenously ch
 oose their optimal\nprice and product\nquality to build demand in each exp
 ort market. Consistent with existing\nresearch\, more productive\nfirms pr
 oduce higher quality products\, charge higher prices\, sell more units\nan
 d achieve higher\nprofits. In our model\, however\, product quality and pr
 ices endogenously evolve\nover time as firms\naccumulate demand in each ma
 rket and maximize the long-run value of the firm.\nWe find that new export
 ers optimally charge relatively low prices and produce\nlow quality goods 
 upon initial entry into export markets. As sales grow\nexporters upgrade p
 roduct quality and increase prices in response to greater\ndemand. We stru
 cturally estimate the model using detailed Chinese customs data.\nOur resu
 lts indicate that the incentive to build future demand reduces export\npri
 ces upon initial entry by 0.5 percent for the average exporter. Over the\n
 following five years\, export prices and product quality are estimated to 
 grow\nby 1 and 6 percent\, respectively\, due to endogenous demand accumul
 ation.Joel\nRodrigue is\nAssistant Professor of Economics at Vanderbilt Un
 iversity. His research\ninterests are in international trade\, firm dynami
 cs\, and applied econometrics.\nHis work has been published in the Interna
 tional\nEconomic Review\, Journal\nof International Economics and Journal\
 nof Development Economics.Sponsored by the Trade Devlopment and Poltical E
 conomy Group at the Moynihan Institute of Global Affairs
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DTSTAMP:20260512T215813Z
DTSTART:20160307T210000Z
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SUMMARY:TDPE presents: Joel Rodrigue
UID:RFCALITEM639142054936082057
X-ALT-DESC;FMTTYPE=text/html:<p></p><p><b>Joel Rodrigue on&nbsp\;Price\nand
  Quality Dynamics in Export Markets</b></p><p><b>Joel Rodrigue\,</b><i>Van
 derbilt University (joint Yong Tan)</i></p><p>This\npaper investigates the
  evolution of firm-level price and quality decisions in\nexport markets.We
 \ndevelop a model of heterogeneous firms which endogenously choose their o
 ptimal\nprice and product\nquality to build demand in each export market. 
 Consistent with existing\nresearch\, more productive\nfirms produce higher
  quality products\, charge higher prices\, sell more units\nand achieve hi
 gher\nprofits. In our model\, however\, product quality and prices endogen
 ously evolve\nover time as firms\naccumulate demand in each market and max
 imize the long-run value of the firm.\nWe find that new exporters optimall
 y charge relatively low prices and produce\nlow quality goods upon initial
  entry into export markets. As sales grow\nexporters upgrade product quali
 ty and increase prices in response to greater\ndemand. We structurally est
 imate the model using detailed Chinese customs data.\nOur results indicate
  that the incentive to build future demand reduces export\nprices upon ini
 tial entry by 0.5 percent for the average exporter. Over the\nfollowing fi
 ve years\, export prices and product quality are estimated to grow\nby 1 a
 nd 6 percent\, respectively\, due to endogenous demand accumulation.</p><p
 ><b>Joel\nRodrigue</b> is\nAssistant Professor of Economics at Vanderbilt 
 University. His research\ninterests are in international trade\, firm dyna
 mics\, and applied econometrics.\nHis work has been published in the Inter
 national\nEconomic Review\, Journal\nof International Economics and Journa
 l\nof Development Economics.</p><p><b><i>Sponsored by the Trade Devlopment
  and Poltical Economy Group at the Moynihan Institute of Global Affairs</i
 ></b><br></p><p></p>
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