Scandinavian Working Papers in Economics

Working Paper Series in Economics and Institutions of Innovation,
Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

No 43: International Trade and Product Variety - a firm level study

Martin Andersson ()
Additional contact information
Martin Andersson: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, Postal: Jönköping International Business School, Jönköping University, Sweden

Abstract: This paper adds to the knowledge of the relationship between international trade and product variety by analyzing the relationship between variety in export supply and exports at the firm-level. Using highly detailed firm-level export data in 2003, the paper finds clear empirical evidence for gains from variety in export supply at the level of individual firms. By applying a decomposition methodology related to Hummels & Klenow (2004), it is shown that these gains can be attributed to a larger amount of markets served and larger export sales per market, roughly on a 50-50 basis. The paper also examines how the export variety of firms varies with distance and GDP across markets. The variety of a firm’s export flows to a market increases with the market’s GDP but decreases with distance. The paper estimates that 15 % of the larger export sales to a market with larger GDP can be attributed to a larger number of products exported to the market. Moreover, the paper finds empirical support for quality differentiation on the behalf of individual firms among markets with different GDP. About one third of the effect of GDP on the total value of the export flows to a market can be ascribed to higher average prices per kilogram of the export products. Products shipped over longer distances tend also to have higher average prices per kilogram.

Keywords: exports; product variety; international trade; multi-product firms

JEL-codes: D21; F12; O40

21 pages, October 18, 2005

Full text files

cesiswp43.pdf PDF-file 

Download statistics

Questions (including download problems) about the papers in this series should be directed to Vardan Hovsepyan ()
Report other problems with accessing this service to Sune Karlsson ().

This page generated on 2018-01-23 23:31:19.