Click here for search results
Heterogeneous quality firms and trade costs, Volume 1
 
Author:Helble, Matthias; Okubo, Toshihiro; Country:World;
Date Stored:2008/03/11Document Date:2008/03/01
Document Type:Policy Research Working PaperSubTopics:Common Carriers Industry; Economic Theory & Research; Markets and Market Access; Free Trade; Transport and Trade Logistics
Language:EnglishRegion:The World Region
Report Number:WPS4550Collection Title:Policy Research working paper ; no. WPS 4550
Volume No:1  

Summary: There is increasing empirical evidence that vertical product differentiation is an important determinant of international trade. However, the economic literature so far has solely focused on the case in which quality trade stems from differences between countries. No studies investigate the role of quality trade between similar economies. This paper first develops a simple theoretical trade model that includes vertical product differentiation in a heterogeneous-firm framework. The model yields three main predictions for trade between similar economies. First, exported goods are of higher quality than goods sold on the domestic market. Second, larger economies have on average higher export qualities compared with smaller economies. Third, with increasing trade costs higher quality goods are exchanged. For all three effects, strong empirical support is found using detailed export trade data of the United States and 15 European Union countries.

Official Documents
Official, scanned versions of documents (may include signatures, etc.)
File TypeDescriptionFile Size (mb)
PDF 44 pagesOfficial version*0.27
TextText version**
How To Order

* The official version is derived from scanning the final, paper copy of the document and is the official,
archived version including all signatures, charts, etc.
** The text version is the OCR text of the final scanned version and is not an accurate representation of the final text.
It is provided solely to benefit users with slow connectivity.



Permanent URL for this page: http://go.worldbank.org/QGM2I283Q0