Verti-Zontal Differentiation in Export Markets
By Francesco Di Comite, Jacques-François Thisse, H. Vandenbussche. Social Science Research Network, 2013
115 citations recorded by the source corpus.
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.
Subfields: Economics and Econometrics, Strategy and Management
View Paper: https://www.semanticscholar.org/paper/3ebecbd1e1097b83d1eca643a5726a53dbb7bb37
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Citations in the corpus
- Acquisitions, markups, efficiency, and product quality: Evidence from India (2018, background): “For instance, Di Comite et al. (2014) distinguish horizontal from vertical differentiation by analyzing differences in consumer tastes across markets.”