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.”

The Quality-Income Effect and the Selection of Location / E. Bacchiega ; A. Minniti. - In: JOURNAL OF URBAN ECONOMICS. - ISSN 0094-1190. - STAMPA. - 65(2):(2009), pp. 209-215.

The Quality-Income Effect and the Selection of Location

BACCHIEGA, EMANUELE;MINNITI, ANTONIO
2009

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.”
2009
The Quality-Income Effect and the Selection of Location / E. Bacchiega ; A. Minniti. - In: JOURNAL OF URBAN ECONOMICS. - ISSN 0094-1190. - STAMPA. - 65(2):(2009), pp. 209-215.
E. Bacchiega ; A. Minniti
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11585/69657
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