Nothing Special   »   [go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/ags/assa15/189696.html
   My bibliography  Save this paper

Food Processing Firms, Input Quality Upgrading and Trade

Author

Listed:
  • Tseng, Eric
  • Sheldon, Ian
Abstract
In this paper the heterogeneous firms and trade literature is extended by integrating quality of inputs and outputs in a food and agricultural setting. Recently, Sexton (2013) has suggested that intermediate agricultural input quality is critical in food processing firms’ output quality and pricing decisions. The results presented in this paper indicate that intermediate agricultural input quality, when combined with the quality of other food processing inputs, is important in analyzing the production decision-making of firms. Extending the model of Kugler and Verhoogen (2012), the quality of food processing inputs is integrated into the analysis in two ways: first, it affects the production of the final good, in that higher quality food processing inputs lower the marginal cost of producing the final good; and, second, food processing input quality is complementary to intermediate input quality in determining quality of the final good. By choosing these elements, firms become differentiated on a vertical (quality) level not only because of their capability draw and intermediate input quality choice, but also because of their choice of food processing inputs. Three key results are developed in the paper: first, larger firms, measured by revenue, charge a higher price for their final good, pay a higher price for their inputs, and produce a higher quality final good. Second, firms that produce for export destinations with a higher preference for quality, choose higher-quality inputs. Third, if preference for quality increases in export-destinations new firms enter the export market, while less capable firms are forced to exit.

Suggested Citation

  • Tseng, Eric & Sheldon, Ian, 2015. "Food Processing Firms, Input Quality Upgrading and Trade," 2015 Allied Social Sciences Association (ASSA) Annual Meeting, January 3-5, 2015, Boston, Massachusetts 189696, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:assa15:189696
    DOI: 10.22004/ag.econ.189696
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/189696/files/Tseng_%20E.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.189696?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Marc J. Melitz & Daniel Trefler, 2012. "Gains from Trade When Firms Matter," Journal of Economic Perspectives, American Economic Association, vol. 26(2), pages 91-118, Spring.
    2. Sven M. Anders & Julie A. Caswell, 2007. "Standards as Barriers Versus Standards as Catalysts: Assessing the Impact of HACCP Implementation on U.S. Seafood Imports," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(2), pages 310-321.
    3. Kalina Manova & Zhiwei Zhang, 2012. "Export Prices Across Firms and Destinations," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 127(1), pages 379-436.
    4. Philippe Aghion & Peter Howitt, 2006. "Joseph Schumpeter Lecture Appropriate Growth Policy: A Unifying Framework," Journal of the European Economic Association, MIT Press, vol. 4(2-3), pages 269-314, 04-05.
    5. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    6. Michael Kremer, 1993. "The O-Ring Theory of Economic Development," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(3), pages 551-575.
    7. Brian R. Copeland & M. Scott Taylor, 1994. "North-South Trade and the Environment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(3), pages 755-787.
    8. Curzi, Daniele & Raimondi, Valentina & Olper, Alessandro, 2013. "Quality Upgrading, Competition and Trade Policy: Evidence from the Agri-Food Sector," 2013: Productivity and Its Impacts on Global Trade, June 2-4, 2013. Seville, Spain 152386, International Agricultural Trade Research Consortium.
    9. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    10. Andrew B. Bernard & J. Bradford Jensen & Stephen J. Redding & Peter K. Schott, 2012. "The Empirics of Firm Heterogeneity and International Trade," Annual Review of Economics, Annual Reviews, vol. 4(1), pages 283-313, July.
    11. Arnaud Costinot, 2009. "An Elementary Theory of Comparative Advantage," Econometrica, Econometric Society, vol. 77(4), pages 1165-1192, July.
    12. Yuan Li & John C. Beghin, 2017. "A meta-analysis of estimates of the impact of technical barriers to trade," World Scientific Book Chapters, in: John Christopher Beghin (ed.), Nontariff Measures and International Trade, chapter 4, pages 63-77, World Scientific Publishing Co. Pte. Ltd..
    13. John Sutton, 2001. "Rich Trades, Scarce Capabilities: Industrial Development Revisited," STICERD - Economics of Industry Papers 28, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    14. Howitt, Peter & Aghion, Philippe, 2006. "Appropriate Growth Policy: A Unifying Framework," Scholarly Articles 4554121, Harvard University Department of Economics.
    15. Sutton, John, 2001. "Rich trades, scarce capabilities: industrial development revisited," LSE Research Online Documents on Economics 2037, London School of Economics and Political Science, LSE Library.
    16. Essaji, Azim, 2008. "Technical regulations and specialization in international trade," Journal of International Economics, Elsevier, vol. 76(2), pages 166-176, December.
    17. Flam, Harry & Helpman, Elhanan, 1987. "Vertical Product Differentiation and North-South Trade," American Economic Review, American Economic Association, vol. 77(5), pages 810-822, December.
    18. John Sutton, 2007. "Quality, Trade and the Moving Window: The Globalisation Process," Economic Journal, Royal Economic Society, vol. 117(524), pages 469-498, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Luckstead, Jeff & Devadoss, Stephen, 2015. "Impacts of TTIP on Processed Food Trade under Monopolistic Competition and Firm Heterogeneity," 2016 Allied Social Sciences Association (ASSA) Annual Meeting, January 3-5, 2016, San Francisco, California 212817, Agricultural and Applied Economics Association.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tseng, Eric & Sheldon, Ian, 2015. "Quality Upgrading, Trade, and Market Structure in Food Processing Industries," 2015: Trade and Societal Well-Being, December 13-15, 2015, Clearwater Beach, Florida 229237, International Agricultural Trade Research Consortium.
    2. Sheldon, Ian M., 2013. "Firms, Quality Upgrading and Trade," 2013: Employment, Immigration and Trade, December 15-17, 2013, Clearwater Beach, Florida 182476, International Agricultural Trade Research Consortium.
    3. Curzi, Daniele & Raimondi, Valentina & Olper, Alessandro, 2013. "Quality Upgrading, Competition and Trade Policy: Evidence from the Agri-Food Sector," 2013: Productivity and Its Impacts on Global Trade, June 2-4, 2013. Seville, Spain 152386, International Agricultural Trade Research Consortium.
    4. Melitz, Marc J. & Redding, Stephen J., 2014. "Heterogeneous Firms and Trade," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 1-54, Elsevier.
    5. Nico Voigtlaender & Diego Saravia, 2013. "Imported Inputs, Quality Complementarity, and Skill Demand," 2013 Meeting Papers 699, Society for Economic Dynamics.
    6. Alcalá, Francisco, 2016. "Specialization across goods and export quality," Journal of International Economics, Elsevier, vol. 98(C), pages 216-232.
    7. Ganguly, Shrimoyee & Acharyya, Rajat, 2022. "Devaluation, Export Quality and Employment in A Small Dependent Economy," Journal of Economic Development, The Economic Research Institute, Chung-Ang University, vol. 47(1), pages 137-165, March.
    8. Brambilla, Irene & Porto, Guido G., 2016. "High-income export destinations, quality and wages," Journal of International Economics, Elsevier, vol. 98(C), pages 21-35.
    9. Carballo, Jeronimo & Ottaviano, Gianmarco I.P. & Volpe Martincus, Christian, 2018. "The buyer margins of firms' exports," Journal of International Economics, Elsevier, vol. 112(C), pages 33-49.
    10. Emanuele Bacchiega & Antonio Minniti & Arsen Palestini, 2016. "Quality, distance and trade: A strategic approach," Papers in Regional Science, Wiley Blackwell, vol. 95, pages 165-191, March.
    11. Sugita, Yoichi & 杉田, 洋一, 2009. "Matching, Quality, Upgrading, and Trade between Heterogeneous Firms," CCES Discussion Paper Series 20, Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University.
    12. Olper, Alessandro & Curzi, Daniele & Raimondi, Valentina, 2015. "Import Penetration, Intermediate Inputs and Firms’ Productivity in the EU Food Industry," 2015 Fourth Congress, June 11-12, 2015, Ancona, Italy 207844, Italian Association of Agricultural and Applied Economics (AIEAA).
    13. Raphael Auer, 2009. "Product Heterogeneity, Within-Industry Trade Patterns, and the Home Bias of Consumption?," Working Papers 09.05, Swiss National Bank, Study Center Gerzensee.
    14. Jihyun Eum, 2018. "Upgrading Product Quality: The Impact of Tariffs and Standards," Working Papers 2018-10, Economic Research Institute, Bank of Korea.
    15. Richter, Philipp M. & Schiersch, Alexander, 2017. "CO2 emission intensity and exporting: Evidence from firm-level data," European Economic Review, Elsevier, vol. 98(C), pages 373-391.
    16. Ingo Geishecker & Philipp J. H. Schröder & Allan Sørensen, 2017. "Explaining the size differences of exporter premia: theory and evidence," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 153(2), pages 327-351, May.
    17. Maurice Kugler & Eric Verhoogen, 2012. "Prices, Plant Size, and Product Quality," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 79(1), pages 307-339.
    18. Ge, Ying & Lai, Huiwen & Zhu, Susan Chun, 2015. "Multinational price premium," Journal of Development Economics, Elsevier, vol. 115(C), pages 181-199.
    19. Naoto Jinji & Xingyuan Zhang & Shoji Haruna, 2022. "Deep Integration, Global Firms, and Technology Spillovers," Advances in Japanese Business and Economics, Springer, number 978-981-16-5210-3, February.
    20. Tseng, Eric, 2014. "Trade Costs, Financial Constraints, and Firm Performance in Developing Countries," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 169786, Agricultural and Applied Economics Association.

    More about this item

    Keywords

    Food Consumption/Nutrition/Food Safety; Production Economics; Research and Development/Tech Change/Emerging Technologies;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:assa15:189696. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.