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Vertical Product Differentiation and the Value of Time

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  • Udayan Roy

Abstract

This paper presents a model of international trade in goods that are ranked by quality. The model differs from existing theories of trade under vertical product differentiation in several ways. The main difference is in the way quality is modeled. But this paper also has different positive implications for the pattern of trade and it provides a theoretical explanation for Leontief Paradox-type empirical findings. The model indicates that several of the most important empirical challenges faced by the Heckscher-Ohlin-Vanek model can be dealt with by taking into account the quality aspect of traded goods.[F1]

Suggested Citation

  • Udayan Roy, 1998. "Vertical Product Differentiation and the Value of Time," International Economic Journal, Taylor & Francis Journals, vol. 12(3), pages 97-111.
    • Handle: RePEc:taf:intecj:v:12:y:1998:i:3:p:97-111
    DOI: 10.1080/10168739800000032
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    References listed on IDEAS

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    1. Trefler, Daniel, 1993. "International Factor Price Differences: Leontief Was Right!," Journal of Political Economy, University of Chicago Press, vol. 101(6), pages 961-987, December.
    2. Nancy L. Stokey, 1991. "The Volume and Composition of Trade Between Rich and Poor Countries," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(1), pages 63-80.
    3. James R. Markusen, 2021. "Explaining the Volume of Trade: An Eclectic Approach," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 9, pages 177-186, World Scientific Publishing Co. Pte. Ltd..
    4. Flam, Harry & Helpman, Elhanan, 1987. "Vertical Product Differentiation and North-South Trade," American Economic Review, American Economic Association, vol. 77(5), pages 810-822, December.
    5. Trefler, Daniel, 1995. "The Case of the Missing Trade and Other Mysteries," American Economic Review, American Economic Association, vol. 85(5), pages 1029-1046, December.
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