Estimations of product quality in China's food processing and manufacturing industries

Sun, Sizhong, and Anwar, Sajid (2022) Estimations of product quality in China's food processing and manufacturing industries. Economic Modelling, 107. 105681.

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Abstract

Using a product variety model, where higher quality products increase consumer utility and quality products are more costly to produce, this paper shows that optimal product quality depends on a parameter of the consumer utility function and firm cost of production. In addition, a firm’s unobserved product quality is structurally linked to its observed sales revenue. The structural relationship allows one to estimate the product quality within an industry. We then utilize firm level data from China over the 2005-2007 period to estimate product quality in China’s (i) food processing and (ii) food manufacturing industries. By comparing the distributions of product quality (and product quality growth rates) over time, we argue that product quality in both industries is improving.

Item ID: 69815
Item Type: Article (Research - C1)
ISSN: 1873-6122
Keywords: Food processing; Food manufacturing; Product quality; China
Copyright Information: © 2021 Published by Elsevier B.V.
Date Deposited: 24 Nov 2021 04:19
FoR Codes: 38 ECONOMICS > 3801 Applied economics > 380109 Industry economics and industrial organisation @ 100%
SEO Codes: 15 ECONOMIC FRAMEWORK > 1505 Microeconomics > 150501 Consumption @ 40%
15 ECONOMIC FRAMEWORK > 1505 Microeconomics > 150510 Production @ 60%
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