Gains from Trade in Differentiated Products: Japanese Compact Trucks
Robert C. Feenstra
We present a methodology for estimating the welfare gains from a product
with new characteristics, and apply it to Japanese and American compact
trucks. Our approach can be used on any products for which a hedonic
regression can be estimated. For 1979-80 we find average welfare gains of
$500-600 per Japanese truck. In later years the benefit to consumers is
reduced by the tariff on imports and the introduction of American compact
models. American compacts have consumer gains which are much less than the
average for Japanese models, since for each American compact there is an
import with very similar characteristics.
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