Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
971954 | Journal of Urban Economics | 2009 | 7 Pages |
Abstract
We analyze a location-choice model with two vertically differentiated firms and two regions with different consumer income. We find that the high-quality producer settles in the poor region and the low-quality one in the rich region when income disparities are sufficiently high and goods are differentiated enough. This apparently counter-intuitive result is not determined by technology or size issues; rather, it relies on the relationship between regional income disparities and product quality, which we call the “Quality-Income effect.”
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Emanuele Bacchiega, Antonio Minniti,