Heterogeneity in Conformism, Firm Selection, and Home Bias
Sergey Kichko and
Pierre Picard ()
CREA Discussion Paper Series from Center for Research in Economic Analysis, University of Luxembourg
This paper discusses the impact of conformism on product quality, firm selection, and trade patterns. It shows that when consumers have a higher degree of conformism and/or their distribution of conformism becomes more concentrated, the equilibrium average demand falls while product quality rises in a closed economy. In an international trade context, this strengthens the home consumption bias when consumers conform to the behavior of local people. The home bias is mitigated under globalization where individuals tend to conform to people worldwide. The paper also discusses the conditions under which conformism and conspicuousness are reconciled.
Keywords: heterogeneity in conformism; product quality; firmheterogeneity; home bias (search for similar items in EconPapers)
JEL-codes: L11 F12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ind and nep-int
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https://wwwfr.uni.lu/content/download/107914/12778 ... nd%20Home%20Bias.pdf (application/pdf)
Working Paper: Heterogeneity in Conformism, Firm Selection, and Home Bias (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:luc:wpaper:18-09
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