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This paper uses uniquely rich and representative data on the unit values of "Outputs" (products) and inputs of Colombian manufacturing plants to draw inferences about the extent of quality differentiation at the plant level. The authors extend the Melitz (2003) framework to include heterogeneity of inputs and a complementarily between plant productivity and input quality in producing output quality and they show that the resulting model carries distinctive implications for two simple reduced-form correlations - between output prices and plant size and between input prices and plant size - and for how those correlations vary across sectors.
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