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Measuring the benefits of foreign product variety with an accurate variety set

Bruce Blonigen and Anson Soderbery ()

Journal of International Economics, 2010, vol. 82, issue 2, 168-180

Abstract: Recent studies have used import data to assess the impact of foreign varieties on domestic prices and welfare. We employ a market-based data set on the U.S. automobile market that allows us to define goods varieties at a more precise level, as well as discern location of production and ownership of varieties. Our estimates of price and welfare changes from new varieties in the U.S. automobile sector are twice as large as standard estimates when using our detailed market-based data. We also show that new varieties introduced by foreign-owned affiliates provided an additional 70% welfare gain during our sample.

Keywords: Product; variety; Trade; Armington; Monopolistic; competition; Automobiles (search for similar items in EconPapers)
Date: 2010
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