Date of Award

Spring 1-1-2014

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Economics

First Advisor

Keith Maskus

Second Advisor

Yongmin Chen

Third Advisor

James Markusen

Fourth Advisor

Terra McKinnish

Fifth Advisor

Nathalie Moyen

Abstract

"Product cycle" refers to the dynamics of production location shifting from an innovative advanced country (the "North") to a lower-cost developing country (the "South"), by means of imitation of traded goods or foreign direct investment. Starting from Vernon (1966), all goods are subject to this identical pattern in research. My dissertation provides both theoretical and empirical evidences that product cycle only exists in a portion of products.

The first chapter builds up a general-equilibrium quality ladder model with endogenous out-sourcing decision: a final good assembler chooses to acquire low-technology inputs from South and high-technology inputs from North. Only the low-technology inputs have the product cycle. The second chapter discovers that trade in product cycle goods is more likely to emerge in relatively-low- technology industries and originate from less developed countries; furthermore, these interesting findings are proving to accentuate over time. The third chapter investigates product cycle dynamics with industrial heterogeneity in R&D productivity, accounting for the imperfect protection of intellectual property rights. Stronger intellectual property protection in the South only increases t he extensive margin of trade in product cycle goods, but not its intensive margin. Fractional probit estimations using a panel of detailed U.S. trade data find support for it.

Included in

Economics Commons

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