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A Reputation Model of Quality in North-South Trade

  • Eric Rasmusen

    (Department of Business Economics and Public Policy, Indiana University Kelley School of Business)

Countries have different comparative advantages in quality. These might be due to technological differences, or to reputation differences of the sort described in Klein & Leffler (1981). Reputation differences are particularly interesting, since good reputations are a form of “social capital” that is amenable to modelling. They can explain why firms in these industries like to export even if the foreign price is no higher than the domestic one, and why governments would like to have large “high- value” sectors.

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File URL: http://kelley.iu.edu/riharbau/RePEc/iuk/wpaper/bepp2007-06-rasmusen.pdf
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Paper provided by Indiana University, Kelley School of Business, Department of Business Economics and Public Policy in its series Working Papers with number 2007-06.

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Date of creation: 2007
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Handle: RePEc:iuk:wpaper:2007-06
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  16. Richard H. McAdams & Eric B. Rasmusen, 2004. "Norms in Law and Economics," Working Papers 2004-11, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
  17. Ricardo J. Caballero & Mohamad L. Hammour, 1996. "The Macroeconomics of Specificity," NBER Working Papers 5757, National Bureau of Economic Research, Inc.
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