Income Distribution, Product Quality, and International Trade / Fajgelbaumy, Pablo

Format:

Book

Government document

Author/Creator:

Fajgelbaumy, Pablo

Contributor:

National Bureau of Economic Research.

Grossman, Gene M.

Helpman, Elhanan.

Series:

Policy research working papers.

World Bank e-Library.

NBER working paper series no. w15329

Language:

English

Physical Description:

1 online resource (43 pages)

Place of Publication:

Washington, D.C., The World Bank, 2011

System Details:

data file

Summary:

The authors develop a framework for studying trade in horizontally and vertically differentiated products. In their model, consumers with heterogeneous incomes and tastes purchase a homogeneous good and make a discrete choice of quality and variety of a differentiated product. The distribution of preferences generates a nested-logit demand structure such that the fraction of consumers who buy a higher-quality product rises with income. The model features a home-market effect that helps to explain why richer countries export higher-quality goods. It provides a tractable tool for studying the welfare consequences of trade and trade policy for different income groups in an economy.

Notes:

Print version record

September 2009.