Search Results
Discussion Paper
Does Import Competition Improve the Quality of Domestic Goods?
Firms must produce high-quality goods to be competitive in international markets, but how do they transition from producing low- to high-quality goods? In a new study (?Import Competition and Quality Upgrading,? forthcoming in the Review of Economics and Statistics), we focus on how tougher import competition affects firms? decisions to upgrade the quality of their goods. Our results, which we summarize in this post, show that stiffer import competition affects quality-upgrading decisions. For firms already producing very high-quality goods, lower tariffs induce them to produce goods of even ...
Discussion Paper
Understating Rising Quality Means Import Price Inflation Is Overstated
It is common for price measures to consider changes in quality. That is, a price index might fall even though listed prices are unchanged because the quality of the item has improved. An adjustment for quality captures the fact that consumers are effectively getting more for the same dollar when product quality rises. In practice, however, it is notoriously difficult to measure quality changes since it requires access to detailed data on all product characteristics that matter to consumers. We offer a novel method to infer quality changes and apply it to U.S. import price indices. When we ...