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High quality exports and consumers’ trust: a development perspective

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  • Nadia Cuffaro

    (University of Cassino)

  • Marina Di Giacinto

    (University of Cassino)

Abstract

We analyze the impact of the effectiveness of internal regulation for the development of internal and export markets for credence goods, particularly for a developing country which is an exporter (or a potential exporter). In the model, since goods of actual different quality can be sold as high quality goods, expected quality is a function of consumers’ beliefs about the effectiveness of regulation. Foreign consumers, who cannot observe foreign regulation as closely as domestic ones, may partly base their expectations on the level of development of the exporting country. Low effectiveness, negative stereotype and low consumers’ trust may cause a failure in the market for high quality, and there may be a trap of underdevelopment and no high quality exports. The main policy implications are that increasing the effectiveness of regulation improves export prospects; standard setting and enforcement by external actors, such as supermarkets, or NGOs in the case of certain niche markets, is likely to be beneficial

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Bibliographic Info

Paper provided by Universita' di Cassino, Dipartimento di Scienze Economiche in its series Working Papers with number 2011-04.

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Length: 19 pages
Date of creation: 21 Jun 2011
Date of revision:
Handle: RePEc:css:wpaper:2011-04

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Postal: Dipartimento di Scienze Economiche Via S. Angelo Loc. Folcara 03043 Cassino (FR) - Italy
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  1. Gilles Grolleau & Julie A. Caswell, 2005. "Interaction Between Food Attributes in Markets: The Case of Environmental Labeling," Working Papers 2005-5, University of Massachusetts Amherst, Department of Resource Economics.
  2. Chisik, Richard, 2003. "Export industry policy and reputational comparative advantage," Journal of International Economics, Elsevier, vol. 59(2), pages 423-451, March.
  3. Winand Emons, 1994. "Credence Goods and Fraudulent Experts," Diskussionsschriften dp9402, Universitaet Bern, Departement Volkswirtschaft.
  4. Nadia Cuffaro, 2008. "Imperfect information, Effectiveness of Regulation and Trade: High quality Credence Goods and Developing Exporters," Working Papers 2008-01, Universita' di Cassino, Dipartimento di Scienze Economiche.
  5. Anania, Giovanni & Nistico, Rosanna, 2003. "Public Regulation As A Substitute For Trust In Quality Food Markets. What If The Trust Substitute Cannot Be Fully Trusted?," 2003 Annual Meeting, August 16-22, 2003, Durban, South Africa 25924, International Association of Agricultural Economists.
  6. Bureau, Jean-Christophe & Marette, Stephan & Schiavina, Alessandra, 1998. "Non-tariff Trade Barriers and Consumers' Information: The Case of the EU-US Trade Dispute over Beef," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 25(4), pages 437-62.
  7. Warren J Bilkey & Erik Nes, 1982. "Country-of-Origin Effects on Product Evaluations," Journal of International Business Studies, Palgrave Macmillan, vol. 13(1), pages 89-100, March.
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