The Determinants of Quality Specialization / World Trade Organization.

Format:

Book

Government document

Author/Creator:

World Trade Organization.

Series:

WTO Working Papers, 25189808 ; no.2014/13.

WTO Working Papers, 25189808 ; no.2014/13

Language:

English

Subjects (All):

Economic research and trade policy analysis.

Local Subjects:

Economic research and trade policy analysis.

Physical Description:

1 online resource (68 pages).

Place of Publication:

Geneva : World Trade Organization, 2014.

System Details:

text file

Summary:

A growing literature suggests that high-income countries export high-quality goods. Two hypotheses may explain such specialization, with different implications for welfare, inequality, and trade policy. Fajgelbaum, Grossman, and Helpman (JPE -2011-) formalize the Linder (1961) conjecture that home demand determines the pattern of specialization and therefore predict that high-income locations export high-quality products. The factor-proportions model also predicts that skill-abundant, high-income locations export skill-intensive, high-quality products (Schott, QJE 2004). Prior empirical evidence does not separate these explanations. I develop a model that nests both hypotheses and employ microdata on US manufacturing plants' shipments and factor inputs to quantify the two mechanisms' roles in quality specialization across US cities. Home-market demand explains at least as much of the relationship between income and quality as differences in factor usage.

Access Restriction:

Restricted for use by site license.