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Effects of Liberalization on Domestic Product Quality

Author

Listed:
  • Kabiraj, Tarun

    (Indian Statistical Institute, India)

  • Roy, Soma

    (Dum Dum Motijheel College,India)

Abstract

In a model of vertical product differentiation we study the impact of liberalization on the choice of the product quality of a local monopolist. We show that under liberalization as one foreign firm enters with a superior quality, the local firm will reduce its quality level unless the foreign firm’s product quality is sufficiently higher. As the efficiency of the local firm goes up, its quality choice responds more under liberalization than under protection. However, its market size in the protective regime is independent of its efficiency level.

Suggested Citation

  • Kabiraj, Tarun & Roy, Soma, 2006. "Effects of Liberalization on Domestic Product Quality," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 21, pages 273-293.
  • Handle: RePEc:ris:integr:0356
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    Cited by:

    1. Soma Roy, 2011. "Income Distribution, Spillover Effects And Choice Of Product Quality," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 36(2), pages 61-86, June.

    More about this item

    Keywords

    Product Quality; Competition; Efficiency; Protection; Liberalization;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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