A Signaling Model of Quality and Export: with application to dumping
AbstractExtending the literature on quality and trade and supported by the empirical evidence obtained from China, this paper demonstrates that in a developing country, a firm’s export to developed countries has a potential signaling effect on domestic consumers’ perception of its product quality. The model analyzes the signaling and imitating strategies of different types of firms in their decisions to export, and characterizes the conditions for the separating, pooling, and hybrid equilibria. Next, the analysis shows that the strategic exporting of low-quality producers under informational asymmetry can result in dumping. Moreover, the model shows that the implementation of antidumping measures of foreign countries can lead to a Pareto improvement for the firms and consumers of the home country under some circumstances.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by DEGIT, Dynamics, Economic Growth, and International Trade in its series DEGIT Conference Papers with number c011_058.
Length: 35 pages
Date of creation: Jun 2006
Date of revision:
Find related papers by JEL classification:
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- F10 - International Economics - - Trade - - - General
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-12-01 (All new papers)
- NEP-CNA-2006-12-01 (China)
- NEP-INT-2006-12-01 (International Trade)
- NEP-MKT-2006-12-01 (Marketing)
- NEP-SEA-2006-12-01 (South East Asia)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Copeland, Brian R. & Kotwal, Ashok, 1996. "Product quality and the theory of comparative advantage," European Economic Review, Elsevier, vol. 40(9), pages 1745-1760, December.
- Peter K. Schott, 2004. "Across-product Versus Within-product Specialization in International Trade," The Quarterly Journal of Economics, MIT Press, vol. 119(2), pages 646-677, May.
- Kevin M.Shleifer Murphy & Andrei, 1991.
"Quality and Trade,"
University of Chicago - George G. Stigler Center for Study of Economy and State
66, Chicago - Center for Study of Economy and State.
- Robert W. Staiger & Frank A. Wolak, 1990.
"The Effect of Domestic Antidumping Law in the Presence of Foreign Monopoly,"
NBER Working Papers
3254, National Bureau of Economic Research, Inc.
- Staiger, Robert W. & Wolak, Frank A., 1992. "The effect of domestic antidumping law in the presence of foreign monopoly," Journal of International Economics, Elsevier, vol. 32(3-4), pages 265-287, May.
- Hallak, Juan Carlos, 2006. "Product quality and the direction of trade," Journal of International Economics, Elsevier, vol. 68(1), pages 238-265, January.
- Flam, Harry & Helpman, Elhanan, 1987. "Vertical Product Differentiation and North-South Trade," American Economic Review, American Economic Association, vol. 77(5), pages 810-22, December.
- Bagwell, Kyle & Staiger, Robert W., 1989.
"The role of export subsidies when product quality is unknown,"
Journal of International Economics,
Elsevier, vol. 27(1-2), pages 69-89, August.
- Kyle Bagwell & R. Staiger, 1987. "The Role of Export Subsidies When Product Quality is Unknown," Discussion Papers 758, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Kyle Bagwell & Robert W. Staiger, 1988. "The Role Of Export Subsisies When Product Quality Is Unknown," NBER Working Papers 2584, National Bureau of Economic Research, Inc.
- Andrew B Bernard & Jonathan Eaton & J. Bradford Jensen & Samuel Kortum, 2000.
"Plants and productivity in international trade,"
00-08, Center for Economic Studies, U.S. Census Bureau.
- Andrew B. Bernard & Jonathan Eaton & J. Bradford Jenson & Samuel Kortum, 2000. "Plants and Productivity in International Trade," NBER Working Papers 7688, National Bureau of Economic Research, Inc.
- Andrew B. Bernard & Jonathan Eaton & J. Bradford Jensen & Samuel Kortum, 2000. "Plants and Productivity in International Trade," Boston University - Institute for Economic Development 105, Boston University, Institute for Economic Development.
- Akerlof, George A, 1970. "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, MIT Press, vol. 84(3), pages 488-500, August.
- Thomas J. Prusa, 1999.
"On the spread and impact of antidumping,"
Departmental Working Papers
199916, Rutgers University, Department of Economics.
- Bagwell, Kyle, 1991.
"Optimal Export Policy for a New-Product Monopoly,"
American Economic Review,
American Economic Association, vol. 81(5), pages 1156-69, December.
- Das, Satya P., 1992. "Market uncertainties and cyclical dumping," European Economic Review, Elsevier, vol. 36(1), pages 71-82, January.
- James Brander & Paul Krugman, 1982.
"A 'Reciprocal Dumping' Model of International Trade,"
513, Queen's University, Department of Economics.
- Brander, James & Krugman, Paul, 1983. "A 'reciprocal dumping' model of international trade," Journal of International Economics, Elsevier, vol. 15(3-4), pages 313-321, November.
- James Brander & Paul Krugman, 1980. "A "Reciprocal Dumping" Model of International Trade," Working Papers 405, Queen's University, Department of Economics.
- James A. Brander & Paul Krugman, 1983. "A 'Reciprocal Dumping' Model of International Trade," NBER Working Papers 1194, National Bureau of Economic Research, Inc.
- Gunnar Niels & Adriaan ten Kate, 2004. "Anti-dumping Protection in a Liberalising Country: Mexico's Anti-dumping Policy and Practice," The World Economy, Wiley Blackwell, vol. 27(7), pages 967-983, 07.
- Kreps, David M & Wilson, Robert, 1982.
Econometric Society, vol. 50(4), pages 863-94, July.
- repec:rus:hseeco:121669 is not listed on IDEAS
- Takao Ohkawa & Makoto Okamura & Noritsugu Nakanishi & Kazuharu Kiyono, 2005. "The Market Selects The Wrong Firms In The Long Run ," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(4), pages 1143-1165, November.
- Shy, Oz, 2000. "Exporting as a Signal for Product Quality," Economica, London School of Economics and Political Science, vol. 67(265), pages 79-90, February.
- Rashid, Salim, 1988. "Quality in Contestable Markets: A Historical Problem?," The Quarterly Journal of Economics, MIT Press, vol. 103(1), pages 245-49, February.
- C. Simon Fan, 2005. "Increasing Returns, Product Quality and International Trade," Economica, London School of Economics and Political Science, vol. 72(285), pages 151-169, 02.
- David Hummels & Peter J. Klenow, 2005. "The Variety and Quality of a Nation's Exports," American Economic Review, American Economic Association, vol. 95(3), pages 704-723, June.
- Roberts, Mark J & Tybout, James R, 1997. "The Decision to Export in Colombia: An Empirical Model of Entry with Sunk Costs," American Economic Review, American Economic Association, vol. 87(4), pages 545-64, September.
- Aggarwal, Aradhna, 2004. "Macro Economic Determinants of Antidumping: A Comparative Analysis of Developed and Developing Countries," World Development, Elsevier, vol. 32(6), pages 1043-1057, June.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michaela Rank).
If references are entirely missing, you can add them using this form.