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Abstract:
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The dissertation has three main chapters on product quality innovation . First , we compare innovation effort and social welfare between monopoly , duopoly , and the social planner in a dynamic model with quality dependent on a continuous know -how stock . The technology frontier - -the largest reachable know -how socks - -does not always positively depend on competitiveness , i .e . a duopoly may technologically surpass the social planner . However , social welfare is always positively tied to competitiveness . Second , with a general equilibrium model , we derive a relative price function expressing productivity and quality effects , and develop a method for inferring relative quality changes . An application to services versus goods of the US from 1946 -2006 provides evidence on aggregate quality changes and suggests us to incorporate quality variations when explaining relative prices . Third , we build a two -product model where productivity changes lead to reallocations of labor between quantity production and quality innovation . The correlation between relative productivity and relative quality is negative for low -range substitutability and positive for medium -range substitutability between two products . Looking at services versus goods of the US , the correlation is negative and productivity -driven quality can play a significant role in general quality development . |