Comparative Advantage Across Goods and Product Quality

Francisco Alcalá

No 201063, Working Papers from Fundacion BBVA / BBVA Foundation

Abstract: This working paper analyzes the connection between country specialization across goods and country specialization within goods along the quality dimension. It builds a model that introduces quality differentiation and firm heterogeneity into the Dornbusch, Fischer and Samuelson (1977) framework. Country market shares across goods are continuous and decreasing in comparative costs. Within each industry, 1) the highest quality is produced by the country with the absolute advantage in the industry; 2) the lowest quality is produced by the country with the lowest wages; 3) each country s average quality is decreasing in its comparative costs in the industry and increasing in its wage level. The model is consistent with previously documented facts and with the specific empirical motivation being provided: it is shown for some illustrative goods that exporter revealed comparative advantage, conditional on exporter income per capita, is positively correlated with the unit value of exports (unit value being interpreted as a proxy for quality).

Keywords: Vertical differentiation; quality margin; extensive margin; North-South trade. (search for similar items in EconPapers)
Pages: 56
Date: 2009-03
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.fbbva.es/TLFU/tlfu/ing/areas/econosoc/p ... index.jsp?codigo=385
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.fbbva.es/TLFU/tlfu/ing/areas/econosoc/publicaciones/documentos/fichadoc/index.jsp?codigo=385 [301 Moved Permanently]--> https://www.fbbva.es/TLFU/tlfu/ing/areas/econosoc/publicaciones/documentos/fichadoc/index.jsp?codigo=385)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fbb:wpaper:201063

Access Statistics for this paper

More papers in Working Papers from Fundacion BBVA / BBVA Foundation Contact information at EDIRC.
Bibliographic data for series maintained by Fundacion BBVA / BBVA Foundation ().