Estimating Price and Quality Elasticities of International Trade

This book is a compilation of three essays that estimate the ¿true¿ trade price elasticity of demand while adjusting for the effect of quality in the trade model. The quality in this work is introduced via our own proxy for quality known as ¿knowledge¿. This proxy takes into account not only direct expenditures (and hence stocks) spent on research and development but also indirect expenditures (and stocks) through positive externalities originating from innovation efforts by other countries and other industries. Each essay looks at how developing and developed countries fare in terms of competitiveness and concludes that there is significant catching up by developing countries in terms of quality competition.