High quality goods drive export prices, shaping global trade dynamics.
The article explores how different firms set prices for their exports based on the quality of their products. By analyzing export prices across different markets, the study shows that high-quality goods are produced by more productive firms and are priced higher. This suggests that firms with higher productivity choose to make better products and charge more for them. The research also reveals that differences in product quality and nontradability play a significant role in determining prices and trade flows between countries.