The manufacture and trade of washing machines and parts offers a clear example of the impact of trade restrictions. The first graph shows the sudden shifts in production in countries following trade duties, and the second shows how the market for washing machine parts is similarly impacted.
US Washing Machine Imports and Korean Washing Machine Part Exports by Country
Product Innovation, Product Diversification, and Firm Growth: Evidence from Japan’s Early Industrialization
Most manufacturers, if they expect to grow and flourish, not only need to expand their existing product line but must also innovate and otherwise add to their product mix, whether that means adding entirely new items or improving the quality of existing goods. In other words, producing the same thing over and over, without any modifications or without branching out into other product lines, is not a typical recipe for long-term success.
Topics: Industrial Organization
Industrial Revolution in Services: Is Big Business Driving Economic Growth?
Topics: Employment & Wages, Industrial Organization
A Global View of Creative Destruction
Trade policy has recently been in the news, with the focus on the costs to firms from higher prices due to trade tariffs. However, the focus on the effect of tariffs on prices misses perhaps the most important benefit from international trade: the transmission of ideas.
Topics: Industrial Organization, Technology & Innovation