TY - JOUR
T1 - “IT’S NOT YOU, IT’S ME”
T2 - PRICES, QUALITY, AND SWITCHING IN U.S.-CHINA TRADE RELATIONSHIPS
AU - Monarch, Ryan
N1 - Funding Information:
I thank my advisers: Andrei Levchenko, Alan Deardorff, Jeremy Fox, Jagadeesh Sivadasan, and Jing Zhang. I am also grateful to Amit Khan-delwal (the editor); three anonymous referees; Dan Ackerberg, Vanessa Alviarez, Andrew Bernard, Rafael Dix-Carneiro, Aaron Flaaen, Colin Hottman, Fariha Kamal, Illenin Kondo, Logan Lewis, and Tim Schmidt-Eisenlohr; and participants at the Peking University National School of Development trade seminar, the 2016 Tsinghua Macro Workshop, the 2015 NBER ITI Spring Meeting, EIIT 2014, the Michigan informal international seminar, the Michigan informal IO seminar, the Penn State Applied Economics conference, the Michigan international seminar, the 2013 RDC Conference, the 2013 Midwest International Meetings, and the U.S. Census Bureau CES seminar series for helpful comments and suggestions. I acknowledge financial support from the Michigan Institute for Teaching and Research in Economics, Rackham Graduate School, the Tokyo Foundation, and the Michigan Center for Chinese Studies. The views expressed here are mine and should not be interpreted as reflecting the views of the U.S. Census Bureau, the Federal Reserve Board of Governors, or any other person associated with the Federal Reserve System. This work was undertaken while I was under special sworn status at the U.S. Census Bureau. All results have been reviewed to ensure no confidential information is disclosed. All errors are mine.
Funding Information:
I thank my advisers: Andrei Levchenko, Alan Deardorff, Jeremy Fox, Jagadeesh Sivadasan, and Jing Zhang. I am also grateful to Amit Khan-delwal (the editor); three anonymous referees; Dan Ackerberg, Vanessa Alviarez, Andrew Bernard, Rafael Dix-Carneiro, Aaron Flaaen, Colin Hottman, Fariha Kamal, Illenin Kondo, Logan Lewis, and Tim Schmidt-Eisenlohr; and participants at the Peking University National School of Development trade seminar, the 2016 Tsinghua Macro Workshop, the 2015 NBER ITI Spring Meeting, EIIT 2014, the Michigan informal international seminar, the Michigan informal IO seminar, the Penn State Applied Economics conference, the Michigan international seminar, the 2013 RDC Con-ference, the 2013 Midwest International Meetings, and the U.S. Census Bureau CES seminar series for helpful comments and suggestions. I ac-knowledge financial support from the Michigan Institute for Teaching and Research in Economics, Rackham Graduate School, the Tokyo Foundation, and the Michigan Center for Chinese Studies. The views expressed here are mine and should not be interpreted as reflecting the views of the U.S. Census Bureau, the Federal Reserve Board of Governors, or any other person asso-ciated with the Federal Reserve System. This work was undertaken while I was under special sworn status at the U.S. Census Bureau. All results have been reviewed to ensure no confidential information is disclosed. All errors are mine.
Publisher Copyright:
© 2020 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.
PY - 2022/9
Y1 - 2022/9
N2 - Costs from switching suppliers can affect prices by discouraging buyer movements from high-to low-cost sellers. This paper uses confidential data on U.S. importers and their Chinese exporters to investigate these costs. I find barriers to supplier adjustments: nearly half of importers keep their partner over time. Importers switch less if their supplier offers higher quality or provides lower prices. I propose and structurally estimate a dynamic discrete choice model to compute switching costs. Cost estimates are large, heterogeneous across products, and matter for trade prices: halving switching costs reduces the U.S.-China Import Price Index by 7.6%.
AB - Costs from switching suppliers can affect prices by discouraging buyer movements from high-to low-cost sellers. This paper uses confidential data on U.S. importers and their Chinese exporters to investigate these costs. I find barriers to supplier adjustments: nearly half of importers keep their partner over time. Importers switch less if their supplier offers higher quality or provides lower prices. I propose and structurally estimate a dynamic discrete choice model to compute switching costs. Cost estimates are large, heterogeneous across products, and matter for trade prices: halving switching costs reduces the U.S.-China Import Price Index by 7.6%.
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U2 - 10.1162/rest_a_01015
DO - 10.1162/rest_a_01015
M3 - Article
AN - SCOPUS:85138921586
SN - 0034-6535
VL - 104
SP - 909
EP - 928
JO - Review of Economics and Statistics
JF - Review of Economics and Statistics
IS - 5
ER -