“It's Not You, It's Me”: Prices, Quality, and Switching in U.S.-China Trade Relationships

2021 ◽  
pp. 1-49
Author(s):  
Ryan Monarch
Keyword(s):  
Switching Costs ◽  
Choice Model ◽  
Low Cost ◽  
Import Price ◽  
Dynamic Discrete Choice ◽  
Dynamic Discrete Choice Model ◽  
China Trade ◽  
Import Price Index ◽  
Confidential Data ◽  
Trade Prices

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 has 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%.

Adjustment Costs and Irreversibility as Determinants of Investment: Evidence from African Manufacturing

2005 ◽  
Vol 4 (1) ◽  
Author(s):  
Arne Bigsten ◽  
Paul Collier ◽  
Stefan Dercon ◽  
Marcel Fafchamps ◽  
Bernard Gauthier ◽  
...  
Keyword(s):  
Discrete Choice ◽  
Choice Model ◽  
Adjustment Costs ◽  
Manufacturing Firms ◽  
Fixed Costs ◽  
Dynamic Discrete Choice ◽  
African Countries ◽  
Dynamic Discrete Choice Model ◽  
Capital Adjustment ◽  
Investment Patterns

Abstract In this paper we investigate if the predictions of three different models of capital adjustment costs are consistent with the observed investment patterns among manufacturing firms in five African countries. We document a high frequency of zero investment episodes, which is consistent with both fixed adjustment costs and irreversibility and inconsistent with quadratic adjustment costs. We model the decision to invest using a dynamic discrete choice model and find evidence of irreversibility and not fixed costs. We finally model the investment rate as a function of the size of the capital disequilibrium. The results confirm that irreversibility is an important factor affecting the investment behaviour of African manufacturing firms. Some implications of this finding are discussed.

scholarly journals Efficient Forestation in the Brazilian Amazon: Evidence from a Dynamic Model

2020 ◽  
Author(s):  
Rafael Araujo ◽  
Francisco J M Costa ◽  
Marcelo Sant'Anna
Keyword(s):  
Land Use ◽  
Forest Cover ◽  
Choice Model ◽  
Substantial Part ◽  
Dynamic Discrete Choice ◽  
Carbon Taxes ◽  
Cattle Production ◽  
Dynamic Discrete Choice Model ◽  
Long Run ◽  
Business As Usual

This paper estimates the Brazilian Amazon’s efficient forestation level. We propose a dynamic discrete choice model of land use and estimate it using a remote sensing panel with land use and stock of carbon of 5.7 billion pixels, at 30 meters resolution, between 2008 and 2017. We estimate that a business as usual scenario will generate an inefficient loss of 1,075,000 km2 of forest cover in the long run, an area almost two times the size of France, implying the release of 44 billion tons of CO2. We quantify the potential of carbon and cattle production taxes to mitigate inefficient deforestation. We find that relatively small carbon taxes can mitigate a substantial part of the inefficient forest loss and emissions, while only very large taxes on cattle production would achieve a similar effect.

Positive Spillovers from Infrastructure Investment: How Pipeline Expansions Encourage Fuel Switching

2021 ◽  
pp. 1-43
Author(s):  
Jonathan B. Scott
Keyword(s):  
Natural Gas ◽  
Choice Model ◽  
Infrastructure Investment ◽  
Dynamic Discrete Choice ◽  
Emissions Reductions ◽  
Dynamic Discrete Choice Model ◽  
Fuel Switching ◽  
Experimental Variation ◽  
Quasi Experimental

Abstract This paper studies the role of the U.S. pipeline infrastructure in the country's transition from coal to natural gas energy. I leverage the EPA's Mercury and Air Toxics Standards as a plausibly exogenous intervention, which encouraged many coal plants to convert to natural gas. Combining this quasi-experimental variation with a plant's preexisting proximity to the pipeline network, I isolate implied pipeline connection costs within a dynamic discrete choice model of plant conversions. Key model results indicate that infrastructure-related costs prevent $9 billion in emissions reductions from taking place, suggesting a $2.4 million per mile external benefit of pipeline expansions.

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