Trade weighting is a common method of aggregating trade frictions. It will understate changes in these costs when there are non<i>ad valorem</i> trade costs and quality differences. Newly traded goods enter at higher trade costs than previously traded ones. Lower import costs shift trade to lowquality...

We analyze quarterly data on light vehicle sales and buyer income to show that both prices and the income of buyers fall over the model year. The result is relevant to determining the rate of quality improvement of goods.