Trade of Vertically Differentiated Products, Quality Improvement, and Welfare

• 발행기관: 서울대학교 경제연구소
• 저자명: Le Duc Niem Taegi Kim
• 간행물 정보: 『Seoul Journal of Economics』Seoul Journal of Economics Volume 33 No.2, 99~119쪽, 전체 21쪽
• 주제분류: 경제경영 > 경제학
• 파일형태: PDF
• 발행일자: 2020.05.30

영문 초록

This paper constructs a simple model to explain how trade in vertically differentiated products affects the welfare of the trading countries when product quality can be selected by firms. We specifically devise a model showing that when trade expands a market, firms will intensively invest in R&D activities to build higher quality into their goods and thus benefit the entire region. We find that trade does not increase the variety of goods but increases their cost due to their higher quality. We conclude that quality improvement is the main mechanism that helps countries gain from trade in vertically differentiated goods.

목차

I. Introduction

II. Model

III. Impact of vertical intra-industry trade on the welfares

IV. Conclusion

Appendix

References

키워드

Product quality Variety of goods Vertical intraindustry trade Welfare