Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/144428
Authors: 
Di Comite, Francesco
Thisse, Jacques-François
Vandenbussche, Hylke
Year of Publication: 
2011
Series/Report no.: 
Working Paper Research 216
Abstract: 
The recent availability of trade data at a firm-product-country level calls for a new generation of models able to exploit the large variability detected across observations. By developing a model of monopolistic competition in which varieties enter preferences non-symmetrically, we show how consumer taste heterogeneity interacts with quality and cost heterogeneity to generate a new set of predictions. Applying our model to a unique micro-level dataset on Belgian exporters with product and destination market information, we find that heterogeneity in consumer tastes is the missing ingredient of existing monopolistic competition models necessary to account for observed data patterns.
Subjects: 
Heterogeneous firms
Product Differentiation
Monopolistic Competition
Nonsymmetric varieties
JEL: 
D43
F12
F14
L16
Document Type: 
Working Paper

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