Measuring quality in international trade

Chi-Hung "Charles" Liao ()

Economic Systems, 2011, vol. 35, issue 1, 125-138

Abstract: Product quality plays a vital role in international trade flows, but the measurement of quality remains to be a challenge because true quality is usually unobserved in trade data. In this study, we propose a straightforward measurement of quality--the weighted-income index--and compare it with the unit-value proxy in a microeconomic model with quality choice. Then we compare the two measurements in the automobile industry. The empirical result shows that the weighted-income quality index performs better than the unit-value quality proxy in ranking true quality.

Keywords: International; trade; Product; quality; Unit; value; Weighted-income; quality; index (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecosys:v:35:y:2011:i:1:p:125-138

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