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The Quality of Export Products and Optimal Trade Policy

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  • Donnenfeld, Shabtai
  • Mayer, Wolfgang

Abstract

This paper demonstrates that voluntary export restraints may be socially desirable to upgrade the quality of export products. When informational externalities in the recognition of quality result in suboptimal production of quality by competitive firms and the enforcement of socially desirable quality is very costly, optimal trade policy calls for export restrictions. These restrictions apply to both size and number of firms in the export industry. Export licenses combined with a specific production tax cum subsidy represent a suitable pair of instruments. Copyright 1987 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Suggested Citation

  • Donnenfeld, Shabtai & Mayer, Wolfgang, 1987. "The Quality of Export Products and Optimal Trade Policy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 28(1), pages 159-174, February.
  • Handle: RePEc:ier:iecrev:v:28:y:1987:i:1:p:159-74
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    Citations

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    Cited by:

    1. McQuade, Timothy & Salant, Stephen W. & Winfree, Jason, 2016. "Markets with untraceable goods of unknown quality: Beyond the small-country case," Journal of International Economics, Elsevier, vol. 100(C), pages 112-119.
    2. Wills, Ian R. & Harris, Jane, 1994. "Government Versus Private Quality Assurance For Australian Food Exports," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 38(1), pages 1-16, April.
    3. Canh Phuc Nguyen & Thanh Dinh Su, 2021. "Export quality dynamics: Multidimensional evidence of financial development," The World Economy, Wiley Blackwell, vol. 44(8), pages 2319-2343, August.
    4. McCluskey, Jill J. & Winfree, Jason A., 2017. "Collective Reputation in Online Platforms and Private Quality Standards," 2018 Allied Social Sciences Association (ASSA) Annual Meeting, January 5-7, 2018, Philadelphia, Pennsylvania 266302, Agricultural and Applied Economics Association.
    5. Acharyya, Rajat & Jones, Ronald W., 2001. "Export quality and income distribution in a small dependent economy," International Review of Economics & Finance, Elsevier, vol. 10(4), pages 337-351, December.
    6. Canh Phuc Nguyen & Thanh Dinh Su, 2022. "Export Dynamics and Income Inequality: New Evidence on Export Quality," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 163(3), pages 1063-1113, October.
    7. Herguera, Iñigo & Lutz, Stefan, 1997. "Trade policy and leapfrogging," UC3M Working papers. Economics 7214, Universidad Carlos III de Madrid. Departamento de Economía.
    8. Ha, Le Thanh, 2023. "The role of financial development in enhancing trades in environmental goods: International insights from 119 countries," Journal of Commodity Markets, Elsevier, vol. 29(C).

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