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Trade in Counterfeit Organic Products

In: International Trade and Economic Dynamics

Author

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  • Kwan E. Choi

    (Iowa State University)

Abstract

This chapter investigates trade in organic and nonorganic products between the North and the South. The labor-abundant South exports the labor-intensive organic product to the North, but imports from the South contain some counterfeits. In the absence of labels, consumers cannot differentiate between the two products using naked eye. When properly labeled, organic and nonorganic products are close substitutes, but the former commands a higher market price. Accordingly, traders have an incentive to pass off the nonorganic product as an organic product. There is no need for the government to regulate the production of organic or nonorganic products. If law enforcement is costly, controlling counterfeit imports is socially optimal, but total elimination of counterfeits or an import ban is not socially optimal.

Suggested Citation

  • Kwan E. Choi, 2009. "Trade in Counterfeit Organic Products," Springer Books, in: Takashi Kamihigashi & Laixun Zhao (ed.), International Trade and Economic Dynamics, pages 123-138, Springer.
    • Handle: RePEc:spr:sprchp:978-3-540-78676-4_12
    DOI: 10.1007/978-3-540-78676-4_12
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