Technology, Trade, and Quality Slopes

CAEPR Working Paper No. 004-2015

41 Pages Posted: 27 Feb 2015 Last revised: 17 Dec 2015

See all articles by Adina Ardelean

Adina Ardelean

Santa Clara University

Volodymyr Lugovskyy

Indiana University Bloomington - Department of Economics

Date Written: February 18, 2015

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. Specifically, 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.

Keywords: Quality Differentiation, Quality Upgrading, Non-homothetic, Technology, International Trade

JEL Classification: F1

Suggested Citation

Ardelean, Adina and Lugovskyy, Volodymyr, Technology, Trade, and Quality Slopes (February 18, 2015). CAEPR Working Paper No. 004-2015 , Available at SSRN: https://ssrn.com/abstract=2569685 or http://dx.doi.org/10.2139/ssrn.2569685

Adina Ardelean

Santa Clara University ( email )

500 El Camino Real
Santa Clara, CA 95053
United States

Volodymyr Lugovskyy (Contact Author)

Indiana University Bloomington - Department of Economics ( email )

Wylie Hall
Bloomington, IN 47405-6620
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
38
Abstract Views
624
PlumX Metrics