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Trading away wide brands for cheap brands

Dhingra, Swati (2013) Trading away wide brands for cheap brands. American Economic Review, 103 (6). pp. 2554-2584. ISSN 0002-8282

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Identification Number: 10.1257/aer.103.6.2554

Abstract

Firms face competing needs to expand product variety and reduce production costs. Access to larger markets enables innovation to reduce costs. Although firm scale increases, foreign competition reduces markups. Firms' ability to recapture lost markups depends on the interplay between within-firm competition and across-firm competition. Narrowing product variety eases within-firm competition but lowers market share. I provide a theory detailing the impact of trade policy on product and process innovation. Unbundling innovation provides new insights into welfare gains and innovation policy. Product innovation increases welfare beyond standard gains from trade. The relative returns to innovation policy change with trade liberalization.

Item Type: Article
Official URL: http://www.aeaweb.org/aer/index.php
Additional Information: © 2013 American Economic Association
Divisions: Economics
Subjects: H Social Sciences > HB Economic Theory
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
Sets: Departments > Economics
Collections > Economists Online
Date Deposited: 20 Mar 2013 15:06
Last Modified: 30 Jan 2019 19:05
URI: http://eprints.lse.ac.uk/id/eprint/46785

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