Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/198940 
Year of Publication: 
2019
Series/Report no.: 
CESifo Working Paper No. 7580
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This paper documents the importance of consumer taste in trade flows using Belgian firm-product customs data by destination. We identify consumer taste through the use of a control function approach and estimate it jointly with other demand parameters using a very flexible demand specification. Consumer taste is identified for every trade ow. The results show that taste decreases in distance but this relationship is not monotonic. The contribution of consumer taste to actual export revenue ranges between 1-31% depending on the product category in the food industry. Overall, the demand shifters, taste and product quality explain twice as much of the variation in export revenues than cost.
Subjects: 
tastes
quality
productivity
exports
firm-product
JEL: 
F12
F14
Document Type: 
Working Paper
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