Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/154113 
Year of Publication: 
2014
Series/Report no.: 
ECB Working Paper No. 1680
Publisher: 
European Central Bank (ECB), Frankfurt a. M.
Abstract: 
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.
Subjects: 
asymmetric preferences
heterogeneous consumers
heterogeneous firms
monopolistic competition
product differentiation
JEL: 
D43
F12
F14
L16
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.