Price and quality competitiveness across OECD countries: An approach to quality by R&D expenditure

The aim of this paper is to analyse the effects quality competitiveness based on technological innovation bilateral trade goods. Our approach estimation an import demand model that uses data for 19 manufacturing sectors across 28 OECD countries over period 1998–2012. In first step, identify from prices, logarithm unit value (a proxy price) regressed private R&D expenditure quality). quality-adjusted prices are derived difference between and its predicted value. second function used distinguish (private expenditure) other factors, such as production costs, which approximated by prices. results step indicate a significant positive effect imported goods in 7 out sectors. emphasise nonlinear goods: when higher, marginal increase greater.