Working Papers, Department of Economics, Aarhus School of Business, University of Aarhus
Jørgen Drud Hansen
Price as an Indicator for Quality in International Trade?
() and Jørgen Ulff-Møller Nielsen
Abstract: This paper examines the relation between price differences
and quality differences in an oligopoly model with intra-industry trade,
where goods are horizontally as well as vertically differentiated. The
analysis demonstrates that the ratio of prices is not linked to the ratio
of qualities in any simple way. The paper therefore questions empirical
trade studies using unit values as an indicator for the quality of the
Keywords: Horizontal product differentiation; Vertical product differentiation; Intraindustry trade; Price ratio; Quality ratio; Unit values; (follow links to similar papers)
JEL-Codes: F12; F13; (follow links to similar papers)
34 pages, January 1, 2008
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