Tariffs, quality reversals and exit in vertically differentiated industries

Herguera, Iñigo; Kujal, Praveen; Petrakis, E.

Tariffs, quality reversals and exit in vertically differentiated industries

Author(s): Herguera, Iñigo; Kujal, Praveen; Petrakis, E.

Publisher: Elsevier

Issued date: 2002

Citation: Journal of International Economics. 2002, vol. 58, nº 2, p. 467-492

ISSN: 0022-1996

DOI: 10.1016/S0022-1996(02)00014-4

Sponsor: The authors would like to thank Jim Markusen and the participants at the meetings in Aix-en-Provence, The International Conference in Industrial Organization (Carlos III), Bellatera (Barcelona), ASSET (Alicante), ETSG (Erasmus) and seminars at Bologna and Vigo universities. The paper was written when Herguera and Petrakis were at Carlos III. The authors would like to thank an anonymous referee, Berthold Herrendorf, and especially the Editor, Jonathan Eaton, for detailed comments that led to a complete rewrite of the paper. Kujal acknowledges support from grants DGESIC [PB98/0024 and CAM 06/0058/2001. Herguera acknowledges support from grant [PB93-236. All remaining errors are our own

Review: PeerReviewed

Publisher version: http://dx.doi.org/10.1016/S0022-1996(02)00014-4

Keywords: Vertically differentiation , Import tariffs , Quality reversals , Exit

JEL Classification: F12 , F13 , L13

URI: http://hdl.handle.net/10016/5338

Rights: © Elsevier

Abstract:

In a vertically differentiated industry a domestic and a foreign firm first choose the quality of their goods and then compete in quantities, or prices, in the home market. We investigate the cases in which a tariff is chosen before, or after, the firms’ quali [+]

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