Eric Verhoogen from Columbia University will present "Markups and Quality: Evidence from Colombian Coffee Exports", with Nicolás de Roux, Rocco Macchiavello, Pepita Miquel-Florensa, and Eric Verhoogen
Drawing on internal records from a Colombian coffee processer and exporter, we explore the relationship between markups and different dimensions of product quality, all of which can be precisely measured. We find that higher-quality coffee is sold at a higher markup, and that this correlation holds within buyers. We explore the conditions under which suppliers of the main input (unmilled “parchment” coffee) are paid quality premia. We also show that standard methods for estimating markups may be misleading in this context.