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Industrial Organization and Product Quality: Evidence from South Korean and Taiwanese Exports

In: Empirical Studies of Strategic Trade Policy

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  • Dani Rodrik

Abstract

The central focus of this paper is on the relationship between domestic market structure and export performance. It evaluates the hypothesis that more concentrated industrial sectors can achieve more easily the transition from standardized, labor-intensive manufactures to sophisticated, skill intensive products, as such industries are better able to cope with the inevitable reputational externalities involved in producing high-quality goods for foreign markets. South Korea and Taiwan provide a good test of the theory, as they have sharply different market structures. The results of the empirical analysis provide strong support for the hypothesis.

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This chapter was published in:

  • Paul Krugman & Alasdair Smith, 1994. "Empirical Studies of Strategic Trade Policy," NBER Books, National Bureau of Economic Research, Inc, number krug94-1.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 8681.

    Handle: RePEc:nbr:nberch:8681

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    Cited by:
    1. Kugler, Maurice & Verhoogen, Eric A., 2009. "The Quality-Complementarity Hypothesis: Theory and Evidence from Colombia," CEPR Discussion Papers 7119, C.E.P.R. Discussion Papers.
    2. Fung, K. C., 2002. "International Trade and Bank Groups: Welfare Enhancing or Welfare Reducing?," Journal of the Japanese and International Economies, Elsevier, vol. 16(2), pages 212-226, June.
    3. Katherine M. Sauer, 2008. "The quality of parallel imports," Economics Bulletin, AccessEcon, vol. 6(44), pages 1-10.
    4. Robert E. Lipsey, 1994. "Quality Change and other Influences on Measures of Export Prices of Manufactured Goods and the Terms of Trade between Primary Products and Manufacture," NBER Working Papers 4671, National Bureau of Economic Research, Inc.
    5. Robert Feenstra & Tzu-Han Yang & Gary G. Hamilton & Pierpaolo Battigalli, 2003. "Business Groups and Trade in East Asia: Part 2, Product Variety," Working Papers 9614, University of California, Davis, Department of Economics.
    6. Menzler-Hokkanen, Ingeborg & Langhammer, Rolf J., 1994. "Product and country substitution in imports : an empirical comparison of theoretical concepts," Open Access Publications from Kiel Institute for the World Economy 1599, Kiel Institute for the World Economy (IfW).
    7. 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.
    8. Deardorff, A.V. & Djankov, S., 2000. "Knowledge Transfer Under Subcontracting: Evidence from Czech Firms," Working Papers 454, Research Seminar in International Economics, University of Michigan.
    9. repec:ebl:ecbull:v:6:y:2008:i:44:p:1-10 is not listed on IDEAS
    10. Lipsey, Robert E., 1994. "Quality change and other influences on measures of export prices of manufactured goods," Policy Research Working Paper Series 1348, The World Bank.
    11. Herman Hoen & Eliza Leeuwen, 1991. "Upgrading and relative competitiveness in manufacturing trade: Eastern europe versus the newly industrializing economies," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 127(2), pages 368-379, June.
    12. Feenstra, R.C. & Yang, T.H. & Hamilton, G.G., 1993. "Market Structure and International Trade: Business Groups in East Asia," Papers 93-23, California Davis - Institute of Governmental Affairs.
    13. Yen, Meng-Feng, 2013. "The Wage Premium and Market Structure: The Case of South Korea and Taiwan," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 151292, Agricultural and Applied Economics Association.
    14. Bee Yan Aw & Sukkyun Chung & Mark J. Roberts, 2002. "Productivity, Output, and Failure: A Comparison of Taiwanese and Korean Manufacturers," NBER Working Papers 8766, National Bureau of Economic Research, Inc.

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