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Quality-Differentiated Inputs and Trade in Vertically Related Markets

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  • Skeath, Susan

Abstract

This paper presents an international trade model of vertically related markets with quality differentiation at the stage of the intermediate good. Domestic input producers are at a disadvantage relative to higher quality foreign suppliers in providing inputs to a domestic final-good producer. The input producer may be driven out of the market unless policies enacted by the domestic government can encourage domestic final-good firms to use the domestic input. Results show that multiple tariffs and direct production subsidies are the most beneficial policy options. Copyright 1995 by Blackwell Publishing Ltd.

Suggested Citation

  • Skeath, Susan, 1995. "Quality-Differentiated Inputs and Trade in Vertically Related Markets," Review of International Economics, Wiley Blackwell, vol. 3(1), pages 104-117, February.
    • Handle: RePEc:bla:reviec:v:3:y:1995:i:1:p:104-17
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    Cited by:

    1. Susan E. Skeath, 1993. "Input tariffs as a way to deal with dumping," New England Economic Review, Federal Reserve Bank of Boston, issue Nov, pages 45-55.

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