The Quality-Income effect and the selection of location
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."
Year of publication: |
2009
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Authors: | Bacchiega, Emanuele ; Minniti, Antonio |
Published in: |
Journal of Urban Economics. - Elsevier, ISSN 0094-1190. - Vol. 65.2009, 2, p. 209-215
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Publisher: |
Elsevier |
Keywords: | Vertical differentiation Income disparities Location Inner city |
Saved in:
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