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Price as an Indicator for Quality in International Trade?

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    Abstract

    This paper examines the relation between price differences and quality differences in an oligopoly model with intra-industry trade, where goods are horizontally as well as vertically differentiated. The analysis demonstrates that the ratio of prices is not linked to the ratio of qualities in any simple way. The paper therefore questions empirical trade studies using unit values as an indicator for the quality of the traded goods.

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    File URL: http://research.asb.dk/fbspretrieve/3868/wp_08-18
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    Bibliographic Info

    Paper provided by University of Aarhus, Aarhus School of Business, Department of Economics in its series Working Papers with number 08-18.

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    Length: 34 pages
    Date of creation: 01 Jan 2008
    Date of revision:
    Handle: RePEc:hhs:aareco:2008_018

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    Postal: The Aarhus School of Business, Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Denmark
    Phone: +45 89 486396
    Fax: +45 8615 5175
    Web page: http://www.asb.dk/departments/nat.aspx
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    Related research

    Keywords: Horizontal product differentiation; Vertical product differentiation; Intraindustry trade; Price ratio; Quality ratio; Unit values;

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