Multi-Product Firms, Quality Differentiation and Comparative Advantage
نویسنده
چکیده
This paper introduces a new theoretical model to explore how the behavior of heterogeneous intermediate suppliers affects the product quality choice of heterogeneous final good producers. It explains the choices of quality, inputs and the export prices of a multi-product firm in response to different market characteristics. We found that a more productive firm exports a larger and higher quality range of products as well as sources their inputs from more productive suppliers. Under greater competition, a firm’s top qualityand most expensiveproducts would be the best-performing ones due to their lowest quality-adjusted prices. The export behavior and export product range of a firm is also affected by the endowment of its sector and country, where it is always easier to start exporting, with a larger export product range in the capital-intensive sector than in the labourintensive sector. JEL codes: F11, F12, L1
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