Date of Award
Doctor of Philosophy
This thesis is primarily concerned with the role of both scale economies and demand differences between countries producing quality differentiated goods, in determining the variety of qualities produced both in autarky, and once trade opens, and on the pattern of trade. Attention is also paid to the effects of trade on individual consumers in each country.;Chapter 3 focuses on the role of demand differences within a country in determining the variety of qualities produced by both price discriminating and non-price discriminating monopolists, in a very flexible two consumer-type version of the basic model of quality differentiated goods production developed in Chapter 2. Comparing the two equilibrium configurations shows that preventing price discrimination or freeing trade between the two groups reduces either the number of qualities produced, or the average level of quality produced. High willingness to pay consumers are shown to gain consumer surplus but only in the presence of a substantial population of low willingness to pay consumers who warrant being served.;Chapter 4 examines the consequences of opening up trade between two economies where consumers in each country are assumed to be uniformly distributed over their willingness to pay for quality. Trade causes the two firms to push their qualities apart from their autarky levels, to minimize the price competition between them. All consumers are shown to gain consumer surplus as a result of the competition brought about by trade. These gains are shown to be larger between countries with narrow distributions, as the scope for firms to differentiate their qualities to avoid price competition is reduced.;Chapter 5 considers a rather special variation of the model developed in Chapter 4, which highlights the role of demand differences by assuming that the distribution of willingnesses to pay for quality for each country is characterized by a right triangular distribution, with the home country having a majority of high willingness to pay consumers, and the foreign country having a majority of low willingness to pay consumers. The pattern of trade which emerges is very much in the spirit of the Linder hypothesis as each country is producing a level of quality in keeping with its respective demand, which it exports to consumers who are on the fringe of the representative demand in the other country.
Bridgeman, Guy A., "International Trade With Quality Differentiated Goods" (1985). Digitized Theses. 1430.