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Industrial Organization and Product Quality: Evidence From South Korean and Taiwanese Exports

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  • Dani Rodrik

Abstract

The central focus of this paper is on the relationship between domestic market structure and export performance. It evaluates the hypothesis that more concentrated industrial sectors can achieve more easily the transition from standardized, labor-intensive manufactures to sophisticated, skill intensive products, as such industries are better able to cope with the inevitable reputational externalities involved in producing high-quality goods for foreign markets. South Korea and Taiwan provide a good test of the theory, as they have sharply different market structures. The results of the empirical analysis provide strong support for the hypothesis.

Suggested Citation

  • Dani Rodrik, 1988. "Industrial Organization and Product Quality: Evidence From South Korean and Taiwanese Exports," NBER Working Papers 2722, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:2722
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    Cited by:

    1. Maurice Kugler & Eric Verhoogen, 2012. "Prices, Plant Size, and Product Quality," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 79(1), pages 307-339.
    2. James E. Rauch, 2001. "Business and Social Networks in International Trade," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1177-1203, December.
    3. Lipsey, Robert E., 1994. "Quality change and other influences on measures of export prices of manufactured goods," Policy Research Working Paper Series 1348, The World Bank.
    4. Ingeborg Menzler-Hokkanen & Rolf Langhammer, 1994. "Product and country substitution in imports: An empirical comparison of theoretical concepts," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 130(2), pages 309-328, June.
    5. Yen, Meng-Feng, 2013. "The Wage Premium and Market Structure: The Case of South Korea and Taiwan," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 151292, Agricultural and Applied Economics Association.
    6. Feenstra, R.C. & Yang, T.H. & Hamilton, G.G., 1993. "Market Structure and International Trade: Business Groups in East Asia," Papers 93-23, California Davis - Institute of Governmental Affairs.
    7. Deardorff, Alan & Djankov, Simeon, 2000. "Knowledge Transfer Under Subcontracting: Evidence from Czech Firms," World Development, Elsevier, vol. 28(10), pages 1837-1847, October.
    8. Fung, K. C., 2002. "International Trade and Bank Groups: Welfare Enhancing or Welfare Reducing?," Journal of the Japanese and International Economies, Elsevier, vol. 16(2), pages 212-226, June.
    9. Sung Hee Jwa, 1997. "Globalization and New Industrial Organization: Implications for Structural Adjustment Policies," NBER Chapters, in: Regionalism versus Multilateral Trade Arrangements, pages 313-344, National Bureau of Economic Research, Inc.
    10. Massimiliano Serati, 2008. "Trade and quality: theoretical and empirical evidence for the euro zone," LIUC Papers in Economics 206, Cattaneo University (LIUC).
    11. Robert E. Lipsey, 1994. "Quality Change and other Influences on Measures of Export Prices of Manufactured Goods and the Terms of Trade between Primary Products and Manufacture," NBER Working Papers 4671, National Bureau of Economic Research, Inc.
    12. Bee Yan Aw & Sukkyun Chung & Mark J. Roberts, 2003. "Productivity, output, and failure: a comparison of taiwanese and korean manufacturers," Economic Journal, Royal Economic Society, vol. 113(491), pages 485-510, November.
    13. Robert C. Feenstra & Tzu-Han Yang & Gary G. Hamilton, "undated". "Business Groups And Trade In East Asia: Part 2, Product Variety," Department of Economics 96-14, California Davis - Department of Economics.
    14. Menzler-Hokkanen, Ingeborg & Spinanger, Dean, 1993. "On the quality of quality measures in international trade," Kiel Working Papers 587, Kiel Institute for the World Economy (IfW Kiel).
    15. Herman Hoen & Eliza Leeuwen, 1991. "Upgrading and relative competitiveness in manufacturing trade: Eastern europe versus the newly industrializing economies," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 127(2), pages 368-379, June.
    16. Maurice Kugler & Eric Verhoogen, 2008. "The Quality-Complementarity Hypothesis: Theory and New Evidence from Colombia," CID Working Papers 183, Center for International Development at Harvard University.
    17. Katherine M. Sauer, 2008. "The quality of parallel imports," Economics Bulletin, AccessEcon, vol. 6(44), pages 1-10.
    18. repec:ebl:ecbull:v:6:y:2008:i:44:p:1-10 is not listed on IDEAS

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