This paper focus on the analysis of import demand functions in presence of quality differentiated products. This issue is more and more relevant because of the strong evidence of such kind of differentiation. Here we first derive individual elasticities, then we aggregate them to the national level without referring to the representative consumer hypothesis. We find that quality reduces reaction to prices without affecting that to income. Interestingly at the national level it seems to emerge that richer country should have imports less reactive to prices. That imply that they could be easily able to move towards high quality-high price production without external balance and competitive problems. The opposite seems to be true for poorer countries. Finally, we show that overlooking quality variables in the estimation generate underestimates of the elasticities to relative prices and to income.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Paper provided by Cattaneo University (LIUC) in its series LIUC Papers in Economics with number
72.
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)