Josepa Miquel-Florensa (Toulouse Capitole University)-Price-Cost Margins and Quality: Evidence from Colombian Coffee Export

Drawing on internal records from a Colombian coffee processor and exporter, we explore the relationship between price-cost margins and product quality. We find that higher-quality coffee is sold at a higher price-cost margin. We develop a model of intermediaries that exercise both output-market and input-market power and use it to estimate the relative contributions of markups and markdowns to the observed price-cost margins, for different quality categories.