Reputational comparative advantage and its role in occupational caste segregation, export industry policy and multinational enterprise

The primary subject matter of this dissertation, outlined in the first chapter, is the effect of stereotypes on the pattern of trade when there is incomplete quality information.; The second chapter analyzes quality choices and sector allocation decisions in an economy where agents have labels and there is incomplete quality information. Agents may attempt to signal their chosen quality. When the signal is noisy, with a non-moving support, all signals are on the equilibrium path. In this case, label-specific stereotypes can affect posterior beliefs and the resulting equilibrium. I give necessary and sufficient conditions for there to be at least three self-fulfilling stereotypes about any label. I introduce the concept of reputational comparative advantage and show that it may determine sector choice for all agents with the same label, even if some agents choose a career in which they have a technological comparative disadvantage. Properties of noisy-signaling models are analyzed. The presence of high-quality signaling depends on the stereotype. I examine the effect of affirmative action and other policies on endogenously determined stereotypes, quality choices and sector decisions.; The third chapter shows that country-of-origin reputation may determine a nation's choice of exports and the quality of those exports. When there is incomplete information concerning product quality, high-quality exporters may attempt to signal their type to importers. When the signal is noisy, reputational comparative may determine the pattern of international trade. Several industrial policies are analyzed and a new role for government policy is established.; The fourth chapter examines the relationship between country-of-origin reputations for product quality and multinational enterprise. A low-quality reputation may depress factor prices and encourage a firm from a high-quality reputation country to engage in multinational enterprise with a firm from a low-quality reputation country. This multinational enterprise may have important effects on country-of-origin quality reputation. I give conditions for the multinational enterprise to be reputation improving and reputation worsening. Because a higher reputation is shown to be welfare improving, the role of trade policy to encourage the types of multinational enterprise which enhance country-of-origin reputation is analyzed.