Consumer preference proximity and distance-related export pricing: evidence from Italian cheese exports

Abstract This paper examines whether consumer preference proximity moderates distance-related FOB export pricing in differentiated-product trade. A well-established finding in international trade is that exporters charge higher FOB unit values in more distant destination markets. We ask whether this distance-related FOB price premium depends on the preference environment of the destination market. Using firm-level Italian customs data for cheese exports, we focus on PDO-associated CN8 cheese categories and operationalize preference proximity through culinary proximity, measured by ingredient-profile similarity between Italian cuisine and destination-country cuisines. We estimate FOB unit-value regressions with firm-product-year fixed effects, exploiting variation in unit values across destination countries within the same firm-product-year combination. We find that geographic distance is positively associated with FOB unit values, while this association is weaker in culinarily proximate markets. This pattern is consistent with a comparison-set mechanism in which culinary proximity increases perceived substitutability within the relevant comparison set and thereby attenuates the distance-related FOB price premium.