Resumen de The Quality of Intermediate Goods: Growth and Welfare Implications.

Yi-Ling Cheng, Juin-jen Chang

• This paper explores the implications of the quality of intermediate goods in an endogenous growth model. We show that a trade-off exists between the quality and the variety of products, which creates a wedge between the market-equilibrium quality and the socially optimal quality. Relative to the social optimum, the equilibrium quality could be either under-supplied or over-supplied, depending on the productivity-enhancing effect as well as the increasing returns to production specialisation and business-stealing effects. [ABSTRACT FROM AUTHOR]