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AA00260492-19950001-0067.pdf
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Title |
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TRADE LIBERALIZATION, PRODUCT QUALITY AND CONSUMERS' WELFARE UNDER MONOPOLISTIC COMPETITION
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TANAKA, Yasuhito
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Kana |
タナカ, ヤスヒト
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Chuo University
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Keio Economic Society, Keio University
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1995
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Keio economic studies
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32
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1
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1995
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Start page |
67
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End page |
76
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Abstract |
This paper examines the effects of trade liberalization on the quality of products and on the welfare of consumers in the domestic country under a monopolistic competition in which the quality of products is endogenously determined by firms. If the fixed cost for the firms is positive and increasing with respect to quality (or identically zero), trade liberalization lowers (or does not affect) the quality of products. The falling in the product quality through trade liberalization lowers the welfare of consumers in the domestic country if the utility cost for consumers per distance from their best product location is small relatively to the derivative of the fixed cost function with respect to quality.
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