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Domestic Industrial Structure and Export Quality

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  • Chiang, Shih-Chen
  • Masson, Robert T
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    Abstract

    Country of origin may provide a signal of product quality. If consumers are on average "correct" in thei r assessments of product quality from a given country, then a "lemons " effect emerges. A firm which pays the full cost of quality improvem ent will receive only diluted benefits in return, while competitors gain by free-riding. The resulting international trade equilibrium i s suboptimal for the exporting country. The country may be able to ra ise its welfare by use of export quality standards, or by internalizi ng the externality by limiting export licenses or by industrial conso lidation. Copyright 1988 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

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    Bibliographic Info

    Article provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.

    Volume (Year): 29 (1988)
    Issue (Month): 2 (May)
    Pages: 261-70

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    Handle: RePEc:ier:iecrev:v:29:y:1988:i:2:p:261-70

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    Cited by:
    1. Oladi, Reza & Beladi, Hamid & Chau, Nancy, 2008. "Multinational corporations and export quality," Journal of Economic Behavior & Organization, Elsevier, vol. 65(1), pages 147-155, January.
    2. Christian Volpe Martincus & Jerónimo Carballo, 2010. "Entering new country and product markets: does export promotion help?," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 146(3), pages 437-467, September.
    3. Menzler-Hokkanen, Ingeborg & Spinanger, Dean, 1993. "On the quality of quality measures in international trade," Kiel Working Papers 587, Kiel Institute for the World Economy.
    4. Maria Luz Loureiro & Jill J. McCluskey, 2000. "Assessing consumer response to protected geographical identification labeling," Agribusiness, John Wiley & Sons, Ltd., vol. 16(3), pages 309-320.
    5. Volpe Martincus, Christian & Carballo, Jerónimo, 2008. "Is export promotion effective in developing countries? Firm-level evidence on the intensive and the extensive margins of exports," Journal of International Economics, Elsevier, vol. 76(1), pages 89-106, September.
    6. Haucap, Justus & Wey, Christian & Barmbold, Jens, 2000. "Location costs, product quality and implicit franchise contracts," Journal of International Economics, Elsevier, vol. 52(1), pages 69-87, October.
    7. Chisik, Richard, 2003. "Export industry policy and reputational comparative advantage," Journal of International Economics, Elsevier, vol. 59(2), pages 423-451, March.
    8. Tomás Castagnino, 2011. "What Drives firms´ Geographic Diversification in International Markets?," BCRA Working Paper Series 201152, Central Bank of Argentina, Economic Research Department.

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