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Technology, Trade, and Quality Slopes

Author

Listed:
  • Adina Ardelean

    (Santa Clara University)

  • Volodymyr Lugovskyy

    (Indiana University)

Abstract

We investigate the factors that, in addition to preferences, affect the extent to which richer households pay more for a given durable good with respect to their expenditures on nondurables, defined as the quality slope. We show theoretically and confirm empirically that the quality slope decreases in the cost elasticity of quality. Given that this elasticity varies across countries, the quality slope also depends on tariffs. Specifcally, it increases in the tariff on middle-income exporters (higher elasticity) and decreases in the tariff on imports from high-income OECD exporters (lower elasticity) to the U.S.

Suggested Citation

  • Adina Ardelean & Volodymyr Lugovskyy, 2015. "Technology, Trade, and Quality Slopes," CAEPR Working Papers 2015-004, Center for Applied Economics and Policy Research, Department of Economics, Indiana University Bloomington.
    • Handle: RePEc:inu:caeprp:2015004
    as

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    File URL: https://caepr.indiana.edu/RePEc/inu/caeprp/caepr2015-004.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Quality Differentiation; Quality Upgrading; Non-homothetic; Technology; International Trade;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade

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