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Quality, productivity and exporting decisions of heterogeneous firms

(2017)

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Abstract
I analyze separately the impact of quality and productivity on prices, mark-ups and export status of firms under different trade cost and preference specifications. To this end I develop a model where firms are heterogeneous across these two dimensions. Domestic producers of different qualities are of similar size as long as their quality-adjusted prices are identical. Only when initially identical firms start exporting their mark-ups, profits and mark-ups will differ.