Exports to Distant Countries Priced Higher, Boosting Quality and Integration
Prices and quality in international trade are influenced by various factors. Firms charge higher prices for exports to distant countries, mainly due to transport costs. The Euro has had a significant impact on the integration of good markets, particularly benefiting large and productive firms. Competition from low-wage countries has led to an increase in the quality of exports from high-wage countries. Changes in imported inputs' prices affect domestic prices, with a 12% elasticity. Firms importing from related parties show lower price sensitivity. Overall, 9% of production price volatility is driven by changes in imported inputs' costs.