BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 18/2013:
What drives the market share changes? Price versus non-price factors
Konstantins Benkovskis ()
and Julia Wörz ()
Abstract: The paper proposes a theoretical framework to explain
gains and losses in export market shares by their price and non-price
determinants. Starting from a demand-side model à la Armington (1969), we
relax several restrictive assumptions to evaluate the contribution of
unobservable changes in taste and quality, taking into account differences
in elasticities of substitution across product markets. Using highly
disaggregated trade data from UN Comtrade, our empirical analysis for the
major world exporters (G7 and BRIC countries) reveals the dominant role of
non-price factors in explaining the competitive gains of BRIC countries and
concurrent decline in the G7’s share of world exports.
Keywords: export market share decomposition; non-price competitiveness; real effective exchange rate; (follow links to similar papers)
JEL-Codes: C43; F12; F14; L15; (follow links to similar papers)
48 pages, August 12, 2013
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