The use of unit values to discriminate between price and quality competition

Abstract

This paper proposes using the unit value of exports to discriminate between markets in which the quantity traded depends more on price competition and those markets in which the quantity traded depends more on non-price competition. The unit value of the exports is a measure available at practically all levels of disaggregation. This measure thus enables us to judge competitiveness for broad industries as well as to trace its sources and structures in narrowly defined product markets. We propose an easy way to discriminate between industries in which low unit values signal low costs and those industries in which high unit values signal high quality or highly processed goods, and we apply this concept of revealed price elasticity (REVELAST) to the German economy.