 무역 자유화와 소비자 후생효과:품질 다양성을 중심으로(The Impact of Trade Liberalization on Consumer Welfare: A Focus on Quality Diversity)Chul Chung (),
Bonggeun Kim () and
Minchirl Chung ()
No 22-15, Policy Reference from Korea Institute for International Economic Policy Abstract: 우리나라가 체결한 많은 자유무역협정(FTA)이 과연 우리 삶의 질을 어떻게 변화시켰는지에 대해 체계적으로 분석한 연구가 흔치 않다. 본 연구는 무역자유화에 따른 수입품목의 다양성 확대와 가격하락에 따른 소비자들의 품질 선택의 폭이 넓어지는 점에 착안하여, 품질 다양성과 소비자의 질적 대응을 중심으로 실증분석을 수행하고 정책시사점을 제시한다. This study investigates the impact of domestic price changes due to external shocks such as trade liberalization or global inflation on quality diversity and consumer welfare. Free trade agreements (FTAs) can reduce the prices of imported goods through tariff elimination or reduction, making it crucial to evaluate academically and in terms of policy how this price reduction affects consumer welfare. In contrast to prior literature on trade liberalization, this study emphasizes the role of quality diversity in explaining its impact on consumer welfare. We focus on how consumers’ qualitative responses to price changes, such as selecting high-quality products when prices decrease due to tariff reductions or responding to price increases due to tobacco taxes by adjusting the quality of their purchases, can influence consumer welfare. This study also provides policy implications regarding the impact of trade liberalization on consumer welfare. Using time-series data on wine and cigarettes in South Korea, this research estimated price elasticities and separated them into consumers’ quantitative and qualitative responses to price changes. The results indicate that the qualitative margin accounts for as much as 40% of the total, demonstrating that consumers’ qualitative responses to price changes are quite significant. We also found a statistically significant consumer behavior mechanism of quality shading in response to price increases for both wine and cigarette consumption, suggesting that consumers’ qualitative responses are as important as their quantitative responses. Moreover, we found that price reductions not only increase the consumption quantity of the same product but also lead to a shift to higher quality products, further enhancing consumers’ welfare. For the first time in the literature, we analyzed qualitative margins by income level and found that the price elasticity is higher for lower-income consumers, and most of it can be attributed to qualitative responses. These empirical findings suggest that consumers can adjust their spending on a particular good through qualitative adjustments while maintaining their overall consumption, particularly in response to rapid inflation. This response mechanism is particularly more effective for low-income households.(the rest omitted) Keywords: Free trade; trade policy; trade liberalization; consumer welfare; consumer response; product diversity; quality selection (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ris:kiepre:2022_015 Access Statistics for this paper More papers in Policy Reference from Korea Institute for International Economic Policy [30147] 3rd Floor Building C Sejong National Research Complex 370 Sicheong-daero Sejong-si, Korea. Contact information at EDIRC. |
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