Determinants of Tanzanian Export Prices
. This paper uses firm-level data to study the pricing-behavior of Tanzanian exporters. The important question of how exporting firms make pricing decisions has not received significant attention in the trade literature, which is more focused on fa...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2013
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2012/10/16829837/determinants-tanzanian-export-prices http://hdl.handle.net/10986/12060 |
| Summary: | . This paper uses firm-level data to
study the pricing-behavior of Tanzanian exporters. The
important question of how exporting firms make pricing
decisions has not received significant attention in the
trade literature, which is more focused on factors that
determine export flows. The results of the paper show that
the free on board price of Tanzanian exports is
differentiated both across exporters -- within
product-destination pairs -- and across markets -- within
firm-product pairs. Moreover, contrasting with existing
evidence, price differentiation across destinations seems to
be mainly relevant for homogenous goods. This result could
indicate either that goods classified as homogeneous can
potentially be differentiated by their intrinsic quality
(such as coffee), or that firms charge different mark-ups in
different markets. Although further work is needed to
confirm what leads to price dispersion, allowing for the
possibility that food products can be vertically
differentiable amplifies the spectrum of existing
opportunities for developing countries to exploit product
differentiation and market niches. The study also discusses
the implications of the empirical findings in light of the
predictions of price and quality competition models, but
finds that the results cannot be explained by a single trade
model of quality or price competition. |
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