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Japanese and Korean Automobile Exports and the Alchian-Allen Theorem

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  • Resiandini, Pramesti

Abstract

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.

Suggested Citation

  • Resiandini, Pramesti, 2012. "Japanese and Korean Automobile Exports and the Alchian-Allen Theorem," MPRA Paper 41928, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:41928
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    File URL: https://mpra.ub.uni-muenchen.de/41928/1/MPRA_paper_41928.pdf
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    References listed on IDEAS

    as
    1. Stock, James H & Watson, Mark W, 1993. "A Simple Estimator of Cointegrating Vectors in Higher Order Integrated Systems," Econometrica, Econometric Society, vol. 61(4), pages 783-820, July.
    2. 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.
    3. 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.
    4. 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 131-138, February.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    International Trade; Transport Costs; Alchian-Allen Theorem; Dynamic OLS;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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