Quality Signaling and International Trade in Food Products

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Quality Signaling and International Trade in Food Products

Author Info

Jean-Christophe Bureau
Estelle Gozlan
Stephan Marette

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Abstract

Focusing on the issue of food safety, the authors consider a framework of repeated purchases under the scenario of imperfect information on product quality (adverse selection and experience goods). A firm in a northern country can more easily detect tainted products than can a southern one. When imports are banned, the northern firm does not always signal the actual quality of its products. Competition from imports may lead the northern firm to test the quality of its products as a way to differentiate itself from foreign competitors. Consumers benefit from the disclosure of information on quality, even though borders are open to products of uncertain quality. However, competition from imports also increases the cost of signaling high quality. This can be detrimental to the welfare of the importing country when the cost of detection is high.

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Paper provided by Center for Agricultural and Rural Development (CARD) at Iowa State University in its series Center for Agricultural and Rural Development (CARD) Publications with number 01-wp283.

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Date of creation: Aug 2001
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Handle: RePEc:ias:cpaper:01-wp283

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Paper
- Jean-Christophe Bureau & Estelle Gozlan & Stephan Marette, 2001. "Quality Signaling and International Trade in Food Products," Food and Agricultural Policy Research Institute (FAPRI) Publications 01-wp283, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University. [Downloadable!]
- J.-C. Bureau & E. Gozlan & S. Marette, 1999. "Quality signaling and international trade in food products," THEMA Working Papers 99-13, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise. [Downloadable!]
- Bureau, Jean-Christophe & Gozlan, Estelle & Marette, Stephan, 2001. "Quality Signaling and International Trade in Food Products," Staff General Research Papers 2002, Iowa State University, Department of Economics. [Downloadable!]
- Bureau, J.-C. & Gozlan, E. & Marette, S., 1999. "Quality Signaling and International Trade in Food Products," Papers 99-13, Paris X - Nanterre, U.F.R. de Sc. Ec. Gest. Maths Infor..

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Other versions:
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