Quality Upgrading and its Welfare Cost in U.S. Steel Imports, 1969-74 / Randi Boorstein, Robert C. Feenstra.

Format:

Book

Author/Creator:

Boorstein, Randi.

Contributor:

National Bureau of Economic Research.

Feenstra, Robert C.

Series:

Working Paper Series (National Bureau of Economic Research) no. w2452.

NBER working paper series no. w2452

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1987.

Summary:

In this paper we measure the quality change which has occurred in U.S. steel imports during the 1969-74 VRA, using an index number method. Under this approach, the yearly changes in unit values is broken into three components: a quality-adjusted or pure price index; a quality index, which measures changes in the product mix; and a supplier index, which measures changes in the source of supply. We also derive a measure of welfare cost, which equals the inverse of a Paasche price index minus the inverse of an exact price index. Over the 1969-74 VRA period we find quality upgrading of 7.4 percent in U.S. steel imports, which occurs most strongly in the first year. The welfare cost of quality change varies around one percent of import expenditure during 1970-73. This cost is at least as large as the conventional deadweight loss triangle, but smaller than the transfer of quota rents.

Notes:

Print version record

December 1987.