TY  - JOUR
AU  - Murphy,Kevin M.
AU  - Shleifer,Andrei
TI  - Quality and Trade
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 3622
PY  - 1991
Y2  - February 1991
UR  - http://www.nber.org/papers/w3622
L1  - http://www.nber.org/papers/w3622.pdf
N1  - Author contact info:
Kevin M. Murphy
Booth School of Business
The University of Chicago
5807 S. Woodlawn Ave.
Chicago, IL  60637
Tel: 773/702-7280
Fax: 773/834-3554
E-Mail: murphy@chicagoBooth.edu

Andrei Shleifer
Department of Economics
Harvard University
Littauer Center M-9
Cambridge, MA 02138
Tel: 617/495-5046
Fax: 617/496-1708
E-Mail: ashleifer@harvard.edu
AB  - We present a model of trade in which similar countries trade more with each other than very different countries. The reason is that high human capital countries have a comparative advantage at producing high quality goods, but are also rich enough to want to consume high quality. As a result, countries choose trading partners at a similar level of development, who produce similar quality products. The model helps account for the observed trade patterns, and sheds light on international income comparisons. It also helps explain recent concerns of Eastern European countries that they have "nothing to sell" to the West.
ER  -