article · 2014
Appendix A Theory Appendix
Paulo Bastos, Joana Silva, Eric Verhoogen
Cited by 0Abstract and details only
Abstract
This section develops a model of endogenous input and output quality choices by heterogeneous firms in asymmetric countries in which consumers differ in their willingness to pay for product quality, building on the Melitz (2003) framework. It can be understood as a general-equilibrium formulation of the model in Verhoogen (2008), which employed a logit-based demand system in a partial-equilibrium setting. The model provides a framework for thinking about how exchange-rate movements will affect average output and input prices at the firm level.1 A.1 Set-up Consider three countries, Home (h), North (n) and South (s), where we think of North as richer than Home and South as poorer than Home in a manner which will be discussed below. Let i index the location of production and j index the location of consumer purchases. In each country, there are three sectors: (1) a homogeneous-good “outside ” sector producing for consumption; (2) a differentiated manufacturing sector producing final goods for consumption; (3) a perfectly com-petitive, non-traded intermediate-input sector, supplying the final-good manufacturers. Both the final-good manufacturing sector and the intermediate-input sector may have quality differences, as will be discussed below.
Cite this paper
Bastos, P., Silva, J., & Verhoogen, E. (2014). Appendix A Theory Appendix.
Bastos, Paulo, et al. “Appendix A Theory Appendix.” 2014.
Bastos, Paulo, Joana Silva, and Eric Verhoogen. 2014. “Appendix A Theory Appendix.”
Bastos, P., Silva, J. and Verhoogen, E. (2014) ‘Appendix A Theory Appendix’.
@article{bastos2014appendix,
title = {{Appendix A Theory Appendix}},
author = {Bastos, Paulo and Silva, Joana and Verhoogen, Eric},
year = {2014}
}Made from the index record. Check names, capitalisation and page numbers against the paper. Need another style? AI for Research has over 10,000.