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Product Cycles and Market Penetration


  • Glass, Amy Jocelyn


This paper constructs a quality ladders product cycle model with multiple quality levels. A lower quality level of each product sells due to differences in willingness to pay for quality across consumers. The model determines how far Southern firms penetrate high-technology product markets. Expanded resources or weakened protection of intellectual property rights in the South relative to the North lead to increased Southern market penetration as observed with East Asian countries. Either cause of increased Southern market penetration implies a reduction in the wage in the North relative to the South and a reduction in the rate of innovation. Copyright 1997 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Suggested Citation

  • Glass, Amy Jocelyn, 1997. "Product Cycles and Market Penetration," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(4), pages 865-891, November.
  • Handle: RePEc:ier:iecrev:v:38:y:1997:i:4:p:865-91

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    References listed on IDEAS

    1. Guesnerie, Roger, 1977. "Monopoly, syndicate, and shapley value: About some conjectures," Journal of Economic Theory, Elsevier, vol. 15(2), pages 235-251, August.
    2. Douglas H. Blair & David L. Crawford, 1984. "Labor Union Objectives and Collective Bargaining," The Quarterly Journal of Economics, Oxford University Press, vol. 99(3), pages 547-566.
    3. Frank, Robert H, 1984. "Are Workers Paid Their Marginal Products?," American Economic Review, American Economic Association, vol. 74(4), pages 549-571, September.
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    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Connolly, Michelle, 1999. "North-South Technological Diffusion: A New Case for Dynamic Gains from Trade," Working Papers 99-08, Duke University, Department of Economics.
    2. Guifang Yang & Maskus, Keith E., 2003. "Intellectual property rights, licensing, and innovation," Policy Research Working Paper Series 2973, The World Bank.
    3. Michael W Nicholson, 2007. "The Impact of Industry Characteristics and IPR Policy on Foreign Direct Investment," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 143(1), pages 27-54, April.
    4. Torben Klarl, 2009. "Modelling the folk theorem of spatial economics: a heterogeneous regional growth model," Working Papers 071, Bavarian Graduate Program in Economics (BGPE).
    5. Glass, Amy Jocelyn & Saggi, Kamal, 2001. "Innovation and wage effects of international outsourcing," European Economic Review, Elsevier, vol. 45(1), pages 67-86, January.
    6. Erdeiné Késmárki-Gally, Szilvia, 1. "Application of a modern marketplace in the European agribusiness," Agroeconomia Croatica, Croatian Society of Agricultural Economists, vol. 5(1).
    7. Alka Chadha, 2005. "Product cycles, innovation and exports: A study of Indian pharmaceuticals," Departmental Working Papers wp0511, National University of Singapore, Department of Economics.
    8. Andrea Brasili & Paolo Epifani & Rodolfo Helg, 1999. "On the dynamics of trade patterns," LIUC Papers in Economics 61, Cattaneo University (LIUC).
    9. Glass, Amy Jocelyn & Saggi, Kamal, 1998. "International technology transfer and the technology gap," Journal of Development Economics, Elsevier, vol. 55(2), pages 369-398, April.
    10. Michelle P. Connolly & Diego Valderrama, 2005. "North-South technological diffusion and dynamic gains from trade," Working Paper Series 2004-24, Federal Reserve Bank of San Francisco.
    11. Glass, Amy Jocelyn & Saggi, Kamal, 2002. "Intellectual property rights and foreign direct investment," Journal of International Economics, Elsevier, vol. 56(2), pages 387-410, March.
    12. Glass, Amy Jocelyn, 2003. "Substitution in R&D across countries," Japan and the World Economy, Elsevier, vol. 15(4), pages 373-390, December.
    13. Chadha, Alka, 2009. "Product Cycles, Innovation, and Exports: A Study of Indian Pharmaceuticals," World Development, Elsevier, vol. 37(9), pages 1478-1483, September.
    14. Ma, Yan, 2015. "The product cycle hypothesis: The role of quality upgrading and market size," International Review of Economics & Finance, Elsevier, vol. 39(C), pages 326-336.
    15. Amy Jocelyn Glass, 1999. "Imitation as a Stepping Stone to Innovation," Working Papers 99-11, Ohio State University, Department of Economics.
    16. Michelle P. Connolly, 1997. "Technological diffusion through trade and imitation," Staff Reports 20, Federal Reserve Bank of New York.
    17. Sergey Kadochnikov & Anna Fedyunina, 2013. "Export diversification in the product space and regional growth: Evidence from Russia," Papers in Evolutionary Economic Geography (PEEG) 1327, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Dec 2013.
    18. Amy Glass, 1999. "Substitution and Returns to Scale in R&D," Working Papers 99-12, Ohio State University, Department of Economics.
    19. Dai, Darong & Shen, Kunrong, 2011. "A New Exploration of Optimal IPR Protection and International Policy Cooperation," MPRA Paper 40039, University Library of Munich, Germany.
    20. Edwin L Lai, 2004. "The Economics of Intellectual Property Protection in the Global Economy," Levine's Working Paper Archive 122247000000000481, David K. Levine.
    21. Spiros Bougheas & David Greenaway & Kittipong Jangkamolkulchai & Richard Kneller, "undated". "Technology Gap, Foreign Direct Investment, and Market Structure," Discussion Papers 08/06, University of Nottingham, GEP.
    22. Lu, Chia-Hui, 2007. "Moving up or moving out? A unified theory of R&D, FDI, and trade," Journal of International Economics, Elsevier, vol. 71(2), pages 324-343, April.

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