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Japanese and Korean Automobile Exports and the Alchian-Allen Theorem

  • Resiandini, Pramesti

This paper compares data on Japanese and Korean automobile exports to the United States to examine consistency with the Alchian-Allen theorem. The theorem suggests that imposing a per unit charge such as transport cost will lower the relative price and increase the relative consumption of higher quality cars. Results show that the relative price of higher-quality cars is not necessarily lower with increased shipping costs, measured by CIF charges (cost, insurance, and freight). A possible explanation is that insurance and other shipping charges are imposed based on the car price, and these charges reduce or eliminate the Alchian-Allen effect of per-unit freight charge.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 41928.

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Date of creation: Jul 2012
Date of revision:
Handle: RePEc:pra:mprapa:41928
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  1. David Hummels & Alexandre Skiba, 2004. "Shipping the Good Apples Out? An Empirical Confirmation of the Alchian-Allen Conjecture," Journal of Political Economy, University of Chicago Press, vol. 112(6), pages 1384-1402, December.
  2. James H. Stock & Mark W. Watson, 1991. "A simple estimator of cointegrating vectors in higher order integrated systems," Working Paper Series, Macroeconomic Issues 91-3, Federal Reserve Bank of Chicago.
  3. Borcherding, Thomas E & Silberberg, Eugene, 1978. "Shipping the Good Apples Out: The Alchian and Allen Theorem Reconsidered," Journal of Political Economy, University of Chicago Press, vol. 86(1), pages 131-38, February.
  4. Banik, Nilanjan & Biswas, Basudeb, 2007. "Exchange rate pass-through in the U.S. automobile market: A cointegration approach," International Review of Economics & Finance, Elsevier, vol. 16(2), pages 223-236.
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