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Revisiting the determinants of unit values

Discussion Papers

No.356

by ITO Tadashi
June 2012

ABSTRACT

This paper studies the issue of how traded quantities affect trade prices, which has been relatively unexplored in the trade literature. By reproducing previous literatures' regressions which are based on the general equilibrium trade theories, incorporating the role of traded quantities, this paper shows a possibility of prevalence of the second degree price discrimination (quantity discount) in international trade, rather than the pricing behaviour of the general equilibrium theories.


Keywords: Heterogeneous firms trade model, Unit value, Second degree price discrimination, Quantity discount
JEL classification: F14

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