Product quality and the international location of manufacturing industry

Gottschalk, Sylvia ORCID logoORCID: (2002) Product quality and the international location of manufacturing industry. Journal of Economic Integration, 17 (2) . pp. 363-376. ISSN 1225-651X [Article] (doi:10.11130/jei.2002.17.2.363)


This paper investigates how trade liberalisation affects manufacturing production in the South when consumer perception of product substitutability in North and South is asymmetric. Consumers in the former view foreign goods as poorer substitutes of domestic varieties, while in the latter foreign and domestic varieties are equally substitutable. The main result of our exercise is that asymmetric product substitutability gives firms in the North better access to markets in the South. Local manufacturing production then becomes unsustainable even at positive trade costs, while deepening trade liberalisation usually results in the South specialising in non-industrial production.

Item Type: Article
Research Areas: A. > Business School > Economics
Item ID: 31939
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Depositing User: Sylvia Gottschalk
Date Deposited: 15 Feb 2021 21:50
Last Modified: 23 Nov 2021 10:30

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