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Measuring quality in international trade

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  • Liao, Chi-Hung

Abstract

Product quality plays a vital role in international trade flows, but the measurement of quality remains to be a challenge because true quality is usually unobserved in trade data. In this study, we propose a straightforward measurement of quality--the weighted-income index--and compare it with the unit-value proxy in a microeconomic model with quality choice. Then we compare the two measurements in the automobile industry. The empirical result shows that the weighted-income quality index performs better than the unit-value quality proxy in ranking true quality.

Suggested Citation

  • Liao, Chi-Hung, 2011. "Measuring quality in international trade," Economic Systems, Elsevier, vol. 35(1), pages 125-138, March.
    • Handle: RePEc:eee:ecosys:v:35:y:2011:i:1:p:125-138
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    References listed on IDEAS

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    3. Bojnec, Stefan & Ferto, Imre, . "Patterns and Drivers of the Agri-Food Intra-Industry Trade of European Union Countries," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 19(2), pages 1-22.

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