Beginning with Krugman and Helpman’s theory of demand for differentiated products, this paper estimates 104 direct price elasticities of demand for apparel in the United States. While the literature has established that apparel elasticities vary by category and across countries, I examine how price elasticities of demand for apparel vary by country, regions, product characteristics, and after the end of the Multi-Fibre Arrangement. Results suggest that the country has the greatest single explanatory power in predicting price elasticities, and additionally, the “race to the bottom” hypothesis in the apparel industry is supported through increasing elasticity of 3.4% from the mean value of overall price elasticity after the end of the MFA.
Martinez, Lauren A., "The Country-Specific Nature of Apparel Elasticities and Impacts of the Multi-Fibre Arrangement" (2012). Economics Honors Projects. Paper 49.
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