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Vertical Product Differentiation and North-South Trade

Harry Flam and Elhanan Helpman
The American Economic Review
Vol. 77, No. 5 (Dec., 1987), pp. 810-822
Stable URL: http://www.jstor.org/stable/1810210
Page Count: 13
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Vertical Product Differentiation and North-South Trade
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Abstract

We develop a model of North-South trade in which the North exports high-quality and the South exports low-quality industrial products. Faster technical progress in the southern industrial sector leads the North to introduce new high-quality products and the South to abandon low-quality products. Production of northern low-quality products is shifted to the South. We also study the effects of technical progress in the North and population growth.

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