Import competition, product quality reversal, and welfare

Yang-Ming Chang and Mian F. Raza

Economics Letters, 2018, vol. 163, issue C, 162-166

Abstract: We investigate product quality in an import-competing country using the framework of vertical product differentiation. Comparison of three polices suggests that the quality-based R&D subsidy brings quality-reversal, leading to a win-win-win equilibrium in consumer surplus, domestic profit and social welfare.

Keywords: Import competition; R&D investment; Product quality reversal; Welfare (search for similar items in EconPapers)
JEL-codes: D43 F12 F13 L13 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:163:y:2018:i:c:p:162-166

DOI: 10.1016/j.econlet.2017.12.021

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