Abstract

http://ssrn.com/abstract=1669103
 
 

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Reference Point Dependence for Specification Bias from Quality Upgrading


Eric Hutton


affiliation not provided to SSRN

John Whalley


University of Western Ontario - Department of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute); Centre for International Governance and Innovation (CIGI)

August 1994

NBER Working Paper No. w4816

Abstract:     
This paper argues that whether estimates of the welfare cost of natural or artificial trade barriers that do not discriminate by quality are subject to positive or negative specification bias when using models which do not explicitly recognize quality variation depends on the reference point used in counterfactual equilibrium analysis. We use numerical general equilibrium techniques to generate counter examples to the widely held view that (in the competitive case) incorporating quality upgrading will tend to reduce the welfare costs of quality invariant trade barriers. To do this, we use a trade-distorted equilibrium as the reference point, rather than free trade.

Number of Pages in PDF File: 22

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Date posted: August 31, 2010  

Suggested Citation

Hutton, Eric and Whalley, John, Reference Point Dependence for Specification Bias from Quality Upgrading (August 1994). NBER Working Paper No. w4816. Available at SSRN: http://ssrn.com/abstract=1669103

Contact Information

Eric Hutton (Contact Author)
affiliation not provided to SSRN
No Address Available
John Whalley
University of Western Ontario - Department of Economics ( email )
London, Ontario N6A 5B8
Canada
519-661-3509, ext. 83509 (Phone)
519-661-3666 (Fax)
HOME PAGE: http://www.ssc.uwo.ca/economics/faculty/
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
CESifo (Center for Economic Studies and Ifo Institute)
Poschinger Str. 5
Munich, DE-81679
Germany
HOME PAGE: http://www.CESifo.de
Centre for International Governance and Innovation (CIGI) ( email )
57 Erb Street West
Waterloo, Ontario N2L 6C2
Canada
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