Trading away wide brands for cheap brands

Dhingra, Swati ORCID: 0000-0001-5468-3415 (2011) Trading away wide brands for cheap brands. CEP Discussion Papers (CEPDP1103). London School of Economics and Political Science. Centre for Economic Performance, London, UK.

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Abstract

Firms face competing needs to expand product variety and reduce production costs. Trade policy affects firm investments in product variety and production processes differently. Access to larger markets enables innovation to reduce costs. Although firm scale increases, foreign competition reduces markups. Firms react by narrowing their product varieties to recapture these lost markups. I provide a theory detailing this conflicting impact of trade policy and address welfare gains from trade. Accounting for firm heterogeneity, I show support for the theoretical predictions with firm-level innovation data from Thailand’s manufacturing sector which experienced unilateral home tariff changes during 2003-2006.

Item Type:	Monograph (Discussion Paper)
Official URL:	https://cep.lse.ac.uk/_new/publications/discussion...
Additional Information:	© 2011 The Author(s)
Divisions:	Economics
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HF Commerce
JEL classification:	F - International Economics > F1 - Trade > F10 - General F - International Economics > F1 - Trade > F14 - Country and Industry Studies of Trade M - Business Administration and Business Economics; Marketing; Accounting > M3 - Marketing and Advertising > M37 - Advertising N - Economic History > N8 - Micro-Business History > N80 - General, International, or Comparative
Date Deposited:	22 Feb 2024 09:27
Last Modified:	01 Nov 2024 05:00
URI:	http://eprints.lse.ac.uk/id/eprint/121770

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