IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/1537.html
   My bibliography  Save this paper

Protection and the Product Line: Monopoly and Product Quality

Author

Listed:
  • Kala Krishna

Abstract

Thereare three points made in this paper. The first is that the question concerning choice of a product line by a monopolist is similar in structure to other adverse selection problems -- and can be analyzed in an elementary way by adapting techniques recently developed for such problems. Such an analysis is developed in the first section. The second is that when a foreign monopolist produces a product line, protection will change the composition of the entire product line.The nature of such effects is studied in the second section and this analysis is greatly simplified by the results of the first sectton. In line with empirical work on the subject, quotas are shown to raise the average quality of imports, while the effects of tariffs are ambiguous.The third concerns the possibility of profit shifting protection which is welfare increasing. The welfare consequences of protection are analyzed in the third section, and are shown to depend crucially on the distribution of consumers.

Suggested Citation

  • Kala Krishna, 1985. "Protection and the Product Line: Monopoly and Product Quality," NBER Working Papers 1537, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:1537
    Note: ITI IFM
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w1537.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Barbara J. Spencer & James A. Brander, 1982. "Tariff Protection and Imperfect Competition," Working Paper 517, Economics Department, Queen's University.
    2. Roger B. Myerson, 1981. "Optimal Auction Design," Mathematics of Operations Research, INFORMS, vol. 6(1), pages 58-73, February.
    3. Phlips,Louis, 1983. "The Economics of Price Discrimination," Cambridge Books, Cambridge University Press, number 9780521283946.
    4. Falvey, Rodney E, 1979. "The Composition of Trade within Import-restricted Product Categories," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 1105-1114, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Claire Chambolle & Eric Giraud‐Héraud, 2005. "Certification of Origin as a Non‐Tariff Barrier," Review of International Economics, Wiley Blackwell, vol. 13(3), pages 461-471, August.
    2. José Luis Moraga Gonzales & Jean-Marie Viaene, 2001. "Procompetitive Trade Policies," CESifo Working Paper Series 597, CESifo.
    3. Randi Boorstein & Robert C. Feenstra, 1987. "Quality Upgrading and its Welfare Cost in U.S. Steel Imports, 1969-74," NBER Working Papers 2452, National Bureau of Economic Research, Inc.
    4. Chambolle, Claire & Giraud-Heraud, Eric, 2002. "Certification of Origin and Brands Competition," 2002 International Congress, August 28-31, 2002, Zaragoza, Spain 24976, European Association of Agricultural Economists.
    5. Kala Krishna, 1985. "Tariffs vs. Quotas with Endogenous Quality," NBER Working Papers 1535, National Bureau of Economic Research, Inc.
    6. Nathalie Lavoie & Qihong Liu, 2007. "Pricing-to-Market: Price Discrimination or Product Differentiation?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(3), pages 571-581.
    7. Jose Luis Moraga-Gonzalez & Jean-Marie Viaene, 2003. "An Example of Procompetitive Trade Policies," Working Papers 504, Research Seminar in International Economics, University of Michigan.
    8. Robert C. Feenstra, 1986. "Gains from Trade in Differentiated Products: Japanese Compact Trucks," NBER Working Papers 1978, National Bureau of Economic Research, Inc.
    9. Andaluz, Joaquin, 2000. "On protection and vertical product differentiation," Regional Science and Urban Economics, Elsevier, vol. 30(1), pages 77-97, January.
    10. Ederington, Josh & McCalman, Phillip, 2013. "Technology adoption, government policy and tariffication," Journal of International Economics, Elsevier, vol. 90(2), pages 337-347.
    11. L. Lambertini, 2002. "the Specialization of Production and Labour Mobility Under Endogenous Differentiation," Working Papers 453, Dipartimento Scienze Economiche, Universita' di Bologna.
    12. Daniel Flores Curiel, 2016. "Subsidizing or taxing education? A note on the quality gap and government finances," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 31(2), pages 339-353.
    13. McCalman, Phillip, 2010. "Trade policy in a "super size me" world," Journal of International Economics, Elsevier, vol. 81(2), pages 206-218, July.
    14. Khan, Nadeem, 1994. "Firm's behavior in the presence of antidumping laws," ISU General Staff Papers 1994010108000011487, Iowa State University, Department of Economics.
    15. L. Lambertini, 1995. "Intraindustry Trade Under Vertical Product Differentiation," Working Papers 233, Dipartimento Scienze Economiche, Universita' di Bologna.
    16. Dungey, Mardi & Jacobs, Jan & Lestano, 2010. "Financial crises in Asia: concordance by asset market or country?," Working Papers 10575, University of Tasmania, Tasmanian School of Business and Economics, revised 01 Nov 2010.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lutz, Stefan H., 2002. "The Effects of Quotas on Vertical Intra-Industry Trade," ZEW Discussion Papers 02-61, ZEW - Leibniz Centre for European Economic Research.
    2. Winston T.H. Koh, 2004. "Congestion Control and Vehicle Ownership Restriction: The Choice of an Optimal Quota Policy," Journal of Transport Economics and Policy, University of Bath, vol. 38(3), pages 371-402, September.
    3. Arve, Malin & Zwart, Gijsbert, 2023. "Optimal procurement and investment in new technologies under uncertainty," Journal of Economic Dynamics and Control, Elsevier, vol. 147(C).
    4. Yuya Wakabayashi & Ryosuke Sakai & Shigehiro Serizawa, 2022. "A Characterization of the Minimum Price Walrasian Rule with Reserve Prices for an Arbitrary Number of Agents and Objects," ISER Discussion Paper 1161, Institute of Social and Economic Research, Osaka University.
    5. Charlotte Emlinger & Viola Lamani, 2020. "International trade, quality sorting and trade costs: the case of Cognac," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 156(3), pages 579-609, August.
    6. Simon P. Anderson & Régis Renault, 2011. "Price Discrimination," Chapters, in: André de Palma & Robin Lindsey & Emile Quinet & Roger Vickerman (ed.), A Handbook of Transport Economics, chapter 22, Edward Elgar Publishing.
    7. Laurent Lamy, 2013. "“Upping the ante”: how to design efficient auctions with entry?," RAND Journal of Economics, RAND Corporation, vol. 44(2), pages 194-214, June.
    8. Yeon-Koo Che & Ian Gale, 1994. "Auctions with budget-constrained buyers: a nonequivalence result," Working Papers (Old Series) 9402, Federal Reserve Bank of Cleveland.
    9. Bogetoft, Peter & Nielsen, Kurt, 2003. "Yardstick Based Procurement Design In Natural Resource Management," 2003 Annual Meeting, August 16-22, 2003, Durban, South Africa 25910, International Association of Agricultural Economists.
    10. Shunda, Nicholas, 2009. "Auctions with a buy price: The case of reference-dependent preferences," Games and Economic Behavior, Elsevier, vol. 67(2), pages 645-664, November.
    11. Stefano Galavotti, 2014. "Reducing Inefficiency in Public Good Provision Through Linking," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 16(3), pages 427-466, June.
    12. Stephen Leider & William S. Lovejoy, 2016. "Bargaining in Supply Chains," Management Science, INFORMS, vol. 62(10), pages 3039-3058, October.
    13. Schmitz, Patrick W., 2003. "On second-price auctions and imperfect competition," Journal of Mathematical Economics, Elsevier, vol. 39(8), pages 901-909, November.
    14. Pablo Guillen & Róbert F. Veszteg, 2021. "Strategy-proofness in experimental matching markets," Experimental Economics, Springer;Economic Science Association, vol. 24(2), pages 650-668, June.
    15. Anil Aswani & Zuo-Jun Max Shen & Auyon Siddiq, 2019. "Data-Driven Incentive Design in the Medicare Shared Savings Program," Operations Research, INFORMS, vol. 67(4), pages 1002-1026, July.
    16. Frank Kelly & Peter Key & Neil Walton, 2016. "Efficient Advert Assignment," Operations Research, INFORMS, vol. 64(4), pages 822-837, August.
    17. Renato Gomes & Alessandro Pavan, 2013. "Cross-Subsidization and Matching Design," Discussion Papers 1559, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    18. ,, 2011. "Manipulative auction design," Theoretical Economics, Econometric Society, vol. 6(2), May.
    19. Blonigen, Bruce A. & Liebman, Benjamin H. & Pierce, Justin R. & Wilson, Wesley W., 2013. "Are all trade protection policies created equal? Empirical evidence for nonequivalent market power effects of tariffs and quotas," Journal of International Economics, Elsevier, vol. 89(2), pages 369-378.
    20. Santiago R. Balseiro & Ozan Candogan & Huseyin Gurkan, 2021. "Multistage Intermediation in Display Advertising," Manufacturing & Service Operations Management, INFORMS, vol. 23(3), pages 714-730, May.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:1537. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.