Testing the Alchian–Allen theorem for three goods using the pseudo Poisson model

Abstract

We show that the Alchian-Allen theorem holds in three-good world. We empirically test the theorem by examining the relative demand for three quality-differentiated coffee varieties sold globally and confirm that a common per-unit charge increases the overall quality of coffee demanded. Our empirical specification employs the Poisson pseudo maximum likelihood method, which prevents sample selection bias when zero flows between country pairs occur and estimated parameter inconsistency when the data exhibit heteroscedasticity. This is a significant improvement compared to previous practice of using the ordinary least squares to estimate the log-log formulation, which led to both biased and inconsistent parameter estimates. K E Y W O R D Sgeneralized Alchian-Allen theorem, Poisson pseudo maximum likelihood estimation, quality-differentiated coffee varieties

Does it matter how we ship the good apples out? On specific tariffs, transport modes, and agricultural export prices

“…On product‐specific findings, Miljkovic and Gómez (2019) and Miljkovic et al. (2019) examine the relative demand for quality‐differentiated coffee varieties exported globally and confirm that a common per‐unit charge increases the quality of coffee demanded. We confirm and extend these findings along a previously unexplored dimension, that is, the mode of transport.…”

“…Miljkovic and Gómez (2019) and Miljkovic et al. (2019) examine the relative demand for quality‐differentiated coffee varieties—Colombian Arabica (high‐quality), Brazilian Arabica (medium‐quality), and Brazilian Robusta (low‐quality). Chen and Juvenal (2022) use expert ratings for wines as a proxy for quality.…”

Revisiting the Impact of Per-Unit Duties on Agricultural Export Prices

“…While ad valorem tariffs have a negative impact on the quality of exported products, specific tariffs 2 induce higher export prices but tend to have no effect on quality upgrading. 3 Miljkovic and Gómez (2019a) and Miljkovic et al (2019b) examine the relative demand for qualitydifferentiated coffee varieties exported globally and confirm that a common per-unit charge increases the overall quality of coffee demanded. 4 Fiankor (2022) also provide supportive evidence that Swiss agri-food exporting firms increase their export prices when faced with a per-unit trade cost.…”

Revisiting the impact of per‐unit duties on agricultural export prices

“…While ad valorem tariffs have a negative impact on the quality of exported products, specific tariffs 2 induce higher export prices but tend to have no effect on quality upgrading. 3 and Miljkovic, G omez, Sharma, and Puerto (2019) examine the relative demand for quality-differentiated coffee varieties exported globally and confirm that a common per-unit charge increases the overall quality of coffee demanded. 4 Fiankor (2022) also provides supportive evidence that Swiss agri-food exporting firms increase their export prices when faced with a per-unit trade cost.…”