Multi-product firms at home and away: Cost- versus quality-based competence

Beata Javorcik, J. Peter Neary and Carsten Eckel and Leonardo Iacovone
Authors registered in the RePEc Author Service: Leonardo Iacovone and Carsten Eckel

No 522, Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: We develop a new model of multi-product firms which invest to improve both the quality of their individual products and of their brand. Because of flexible manufacturing, products closer to firms' core competence have lower costs, so they produce more of them, and also have higher incentives to invest in their quality. These two effects have opposite implications for the profile of prices. Mexican data provide robust confirmation of the model's key prediction: firms in differentiated-good sectors exhibit quality-based competence (prices fall with distance from core competence), but export sales of firms in non-differentiated-good sectors exhibit the opposite.

Keywords: Flexible manufacturing; multi-product firms; quality competition (search for similar items in EconPapers)
JEL-codes: F12 (search for similar items in EconPapers)
Date: 2010-12-01
New Economics Papers: this item is included in nep-bec, nep-com and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Related works:
Journal Article: Multi-product firms at home and away: Cost- versus quality-based competence (2015)
Working Paper: Multi-product firms at home and away: Cost- versus quality-based competence (2015)
Working Paper: Multi-Product Firms at Home and Away: Cost- versus Quality-based Competence (2011)
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