Dear colleagues, The Department of Economics cordially invites you to the WU Economics Research Seminar on Wednesday, March 6th, with Angelo Zago (University of Verona) on "Trade, Quality, and Collective Reputation. The Case of Wine" Abstract: We consider an extension of the model of monopolistic competition with heterogeneous firms from Melitz and Ottaviano (2008) into several directions. On the demand side, utility depends on perceived quality, that is on a convex combination of individual firm's quality and of collective reputation. The weight on the individual firm quality increases with the degree of awareness of the representative consumer in the destination market. If the consumer is relatively unaware (new market), the collective or 'national' reputation has a bigger role in perceived quality. On the supply side, we introduce the possibility of endogenous quality choice as in Antoniades (2015), but with a more general specification to obtain correlations between sizes, sales, prices and qualities that match the European wine sector. The model enables to show how market toughness affects firm's behavior through the scope for quality differentiation. We show, among other things, that investment in quality and firms that behave as quality leaders change with the degree of consumers' expertise in the destination markets, and in a positive but decreasing fashion. Using cross- sectional firm's level data, we find that wine quality, collective reputation and consumer expertise are indeed important in making exporting more likely (extensive margins), in exporting different products, and (to some extent) also in exporting more (intensive margins). Overall, we fail to reject the null hypothesis that the degree of expertise in destination markets do not have an effect on the firms that export and the product they do export. This seems to suggest that the endogenous quality model we propose better fits the data at hand. Date: Wednesday, March 6th Time: 4.30 to 6 pm (CET) Location: building D4, ground floor, room D4.0.019<https://campus.wu.ac.at/?q=D4.0.019> With best regards, Harald Oberhofer --- Univ.-Prof. Dr. Harald Oberhofer Department of Economics WU Vienna University of Economics and Business Phone: +43/1/31336-4984 Email: harald.oberhofer@wu.ac.at<mailto:harald.oberhofer@wu.ac.at> Webpage: https://www.wu.ac.at/ie/mitarbeiter/harald-oberhofer/ Austrian Institute of Economic Research (WIFO) Phone: +43/1/7982601-468 Email: harald.oberhofer@wifo.ac.at<mailto:harald.oberhofer@wifo.ac.at> Webpage: http://www.wifo.ac.at/harald_oberhofer