Reference : Vertical differentiation and trade among symmetric countries.
Scientific journals : Article
Business & economic sciences : International economics
Sustainable Development
Vertical differentiation and trade among symmetric countries.
Picard, Pierre M mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA) >]
Tampieri, Alessandro []
Econometric Theory
Cambridge University Press
Yes (verified by ORBilu)
[en] trade ; vertical differentiation
[en] We study a trade model with vertical product differentiation with many goods that are heterogeneous in cost and quality and produced in two quality versions. We discuss the composition of high- and low-quality goods in the workers’ consumption baskets in countries between comparable countries. We show that a larger country population fosters its specialization in high-quality production while a higher country productivity leads to specialization in high quality production for all countries. Smaller trade costs foster specialization in high quality exports. We then discuss the effect of population heterogeneity on the consumption baskets and country specialization. Most of those results agree with existing empirical findings.

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