“IT’S NOT YOU, IT’S ME”: PRICES, QUALITY, AND SWITCHING IN U.S.-CHINA TRADE RELATIONSHIPS

Research output: Contribution to journalArticlepeer-review

Abstract

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%.

Original languageEnglish (US)
Pages (from-to)909-928
Number of pages20
JournalReview of Economics and Statistics
Volume104
Issue number5
DOIs
StatePublished - Sep 2022

ASJC Scopus subject areas

  • Social Sciences (miscellaneous)
  • Economics and Econometrics

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