Price Competition or Quality Competition? Evidence of Forest Products in Top Exporting Countries

Abstract

Price competition and quality competition are the main ways to increase and maintain international competitiveness in the world. However, competitive strategies can vary significantly from product to product. With the utility function and trade gravity model as the research framework in this paper, we use the top 10 countries in terms of the trade volume of forest products from 2012 to 2021 as samples to systematically explore the differential impacts of price and quality on the international competitiveness of forest products. The results of the panel data model that show the regression coefficient of forest product price in terms of international competitiveness are significantly negative, while the regression coefficient of forest product quality is significantly positive, but the absolute value of the regression coefficient of product quality is higher than that of forest product price. Thus, the price and quality of forest products are key factors affecting international competitiveness in general, with the quality of forest products having a higher impact on international competitiveness than the price. However, a further analysis of different forest product categories and countries revealed significant differences in the significance and magnitude of price and quality impacts on international competitiveness. The quality of forest products contributes more to international competitiveness in Brazil, Canada, Germany, Russia, Sweden and the United States. Conversely, the price of forest products in China, Finland, Italy and Poland contributes more to international competitiveness. Therefore, an objective choice of price, quality or a quality:price ratio strategy, taking into account the industry and characteristics of forest products in each country, can contribute to the sustainable improvement of the international competitiveness of forest products.