Quality innovation: driving forces and implications for production, trade, and consumption

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Quality innovation: driving forces and implications for production, trade, and consumption

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Title: Quality innovation: driving forces and implications for production, trade, and consumption
Author: Nguyen, Thang Quang, 1977-
Abstract: The dissertation has three main chapters on product quality innovation. First, we compare innovation effort and social welfare between monopoly, duopoly, and the social planner in a dynamic model with quality dependent on a continuous know-how stock. The technology frontier--the largest reachable know-how socks--does not always positively depend on competitiveness, i.e. a duopoly may technologically surpass the social planner. However, social welfare is always positively tied to competitiveness. Second, with a general equilibrium model, we derive a relative price function expressing productivity and quality effects, and develop a method for inferring relative quality changes. An application to services versus goods of the US from 1946-2006 provides evidence on aggregate quality changes and suggests us to incorporate quality variations when explaining relative prices. Third, we build a two-product model where productivity changes lead to reallocations of labor between quantity production and quality innovation. The correlation between relative productivity and relative quality is negative for low-range substitutability and positive for medium-range substitutability between two products. Looking at services versus goods of the US, the correlation is negative and productivity-driven quality can play a significant role in general quality development.
Department: Economics
Subject: Quality of products--Econometric models Quality control--Econometric models Competition--Econometric models Pricing--United States--Econometric models Industrial productivity--United States--Econometric models Service industries--United States--Econometric models
URI: http://hdl.handle.net/2152/3389
Date: 2007

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