This paper assesses how bilateral distance affects observed spatial variation in free-on-board (FOB) export prices across destinations. I estimate linear models that regress firm-product- destination-time FOB unit values on distance, firm-product-time fixed effects, and destination country controls. I find that if distance doubles the average Swiss agri-food firm increases its FOB export price by 2.3%. My findings show that consumers in distant countries pay higher prices partly because firms charge higher prices net cost-insurance-freight costs. I explain my findings using trade models where firms endogenously choose destination-specific quality for their products.
