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- Title
Judicial Quality, Input Customisation, and Trade Margins: The Role of Product Quality.
- Authors
Cui, Xiaomin; Yu, Miaojie; Zhang, Rui
- Abstract
We study how the contracting environment affects the quality of trade. A better contracting environment not only induces specialisations in industries intensively using customised inputs, but also causes quality upgrading of domestic varieties and tougher competition in these industries. We incorporate these effects into a Ricardian model with customised input and product quality. Our model predicts that better judicial quality raises a country's import prices and quality more in contract-intensive products, but has no impacts on its export prices or quality. We empirically confirm these predictions and find that rising judicial quality is associated with increasing specialisations in contract-intensive industries.
- Subjects
MARGINS (Security trading); PRODUCT quality; ENVIRONMENTAL quality
- Publication
Economic Journal, 2022, Vol 132, Issue 643, p926
- ISSN
0013-0133
- Publication type
Article
- DOI
10.1093/ej/ueab098