Spatial Price Discrimination in International Markets: from Models to Data

This paper focuses on the spatial price discrimination in an international context, i.e. the impact of distance on fob prices set by exporting firms. The theoretical part of this paper points out the importance of the trade cost formulation on the pricing policy adopted by the firms. The empirical part shows that French firms adopt a reverse dumping strategy. In other word, firms increases their fob price with the distance. The main models of international trade fail to predict such positive relation at the firm level, even when introducing quality. Moreover, with or without quality, models need an additive part in their transport cost to generate the observed positive relationship between price and distance which questions the use of iceberg costs.