Lutz, Stefan H. - Zentrum für Europäische Wirtschaftsforschung (ZEW) - 2002
welfare depend crucially on the direction of international vertical differentiation. If the foreign firm produces low quality …, both firms' prices and profits rise but domestic welfare falls. This describes well some major effects of a Japanese VER in …. Since domestic consumer surplus falls only unsubstantially, domestic profit gains lead to an increase of domestic welfare. …