Organic certification systems and international trading of agricultural products in gravity models
AbstractRecent literature about gravity models points out the importance of institutional frictions in the international market of agricultural products beyond the traditional economics variables as transport costs reducing the mass of trade in bilateral relationships. In particular, previous contributions stress that harmonization of food standards could decrease transaction costs in trading relationships by stimulating international market. In a previous work we hypothesized that the acknowledgment of equivalence in organic standards may represent a reliable signal of affinity in bilateral relationships which may be useful to identify areas in which transaction costs for both conventional and organic standards are lower. This article represents a step forward, since it assumes that the acknowledgment of equivalence in identifying areas with lower transaction costs in trading relationships for the whole produce could be a strong assumption that may be relaxed through the hypothesis that affinity in market exchange could be simply signaled by the presence of organic standards for the involved countries. Therefore, in our analysis we test if countries setting specific rules for organic standards are more “affine” in trading relationships because of a low common cultural, law and political distance but also if differences in organic standards themselves can be useful to differentiate the level of affinity among regions. Interesting insights for policy makers about the identification of relevant variables for international business arise from an econometric analysis.
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Bibliographic InfoPaper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida with number 6159.
Date of creation: 2008
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Gravity models; organic standards; transaction costs; international market; agricultural trade; food products; Agricultural and Food Policy; Research Methods/ Statistical Methods; Q11; Q13;
Find related papers by JEL classification:
- Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
- Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
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