QUOTAS,QUALITY CHOICE,AND COST FUNCTION: A Foreign Monopoly Case |
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| Authors: | Tsuyoshi Toshimitsu |
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| Institution: | College of Business , Minnesota State University Moorhead , Moorhead, Minnesota, USA |
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| Abstract: | It is well known in international economics that quotas lead to quality upgrading of imports. In this article, however, we reconsider this proposition by focusing on the nature of cost function. If a fixed cost is an increasing function of quality, quotas can lead to quality downgrading of imports. This issue will be addressed in the context of a foreign monopoly. |
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