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Import competition, product quality reversal, and welfare

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  • Chang, Yang-Ming
  • Raza, Mian F.

Abstract

We investigate product quality in an import-competing country using the framework of vertical product differentiation. Comparison of three polices suggests that the quality-based R&D subsidy brings quality-reversal, leading to a win-win-win equilibrium in consumer surplus, domestic profit and social welfare.

Suggested Citation

  • Chang, Yang-Ming & Raza, Mian F., 2018. "Import competition, product quality reversal, and welfare," Economics Letters, Elsevier, vol. 163(C), pages 162-166.
    • Handle: RePEc:eee:ecolet:v:163:y:2018:i:c:p:162-166
    DOI: 10.1016/j.econlet.2017.12.021
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    References listed on IDEAS

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    Cited by:

    1. Chang, Yang-Ming & Raza, Mian F., 2023. "Dumping, antidumping duties, and price undertakings," Research in Economics, Elsevier, vol. 77(1), pages 131-151.
    2. Fan, Zhi-Ping & Cao, Yue & Huang, Chun-Yong & Li, Yongli, 2020. "Pricing strategies of domestic and imported electric vehicle manufacturers and the design of government subsidy and tariff policies," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 143(C).

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    More about this item

    Keywords

    Import competition; R&D investment; Product quality reversal; Welfare;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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