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Quality Signaling and International Trade in Food Products

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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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Publisher Info
Paper provided by Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University in its series Food and Agricultural Policy Research Institute (FAPRI) Publications with number 01-wp283.

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

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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.:
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  2. Falvey, Rodney E, 1989. "Trade, Quality Reputations and Commercial Policy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 30(3), pages 607-22, August. [Downloadable!] (restricted)
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  4. Grossman, Gene M & Shapiro, Carl, 1988. "Counterfeit-Product Trade," American Economic Review, American Economic Association, vol. 78(1), pages 59-75, March. [Downloadable!] (restricted)
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  5. 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. [Downloadable!] (restricted)
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  6. Mailath George J. & Okuno-Fujiwara Masahiro & Postlewaite Andrew, 1993. "Belief-Based Refinements in Signalling Games," Journal of Economic Theory, Elsevier, vol. 60(2), pages 241-276, August. [Downloadable!] (restricted)
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  16. Doughety, Andrew F & Reinganum, Jennifer F, 1997. "Everybody Out of the Pool: Products Liability, Punitive Damages, and Competition," Journal of Law, Economics and Organization, Oxford University Press, vol. 13(2), pages 410-32, October.
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  19. Cho, In-Koo & Kreps, David M, 1987. "Signaling Games and Stable Equilibria," The Quarterly Journal of Economics, MIT Press, vol. 102(2), pages 179-221, May. [Downloadable!] (restricted)
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  22. Haucap, Justus & Wey, Christian & Barmbold, Jens, 2000. "Location costs, product quality and implicit franchise contracts," Journal of International Economics, Elsevier, vol. 52(1), pages 69-87, October. [Downloadable!] (restricted)
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  23. Hayes, Dermot J. & Shogren, Jason F. & Shin, Seung Youll & Kliebenstein, James B., 1995. "Valuing Food Safety in Experimental Auction Markets," Staff General Research Papers 835, Iowa State University, Department of Economics.
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  1. Banerjee, Nandini & Kennedy, P. Lynn, 2006. "Sanitary and Phytosanitary Measures : A Game Theoretic Approach of Comparative Evaluation," 2006 Annual Meeting, February 5-8, 2006, Orlando, Florida 35375, Southern Agricultural Economics Association. [Downloadable!]
  2. Steiner, Bodo, 2002. "The Valuation Of Labelling Attributes In A Wine Market," 2002 Annual meeting, July 28-31, Long Beach, CA 19718, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  3. Zago, Angelo M. & Pick, Daniel, 2004. "Labeling Policies in Food Markets: Private Incentives, Public Intervention, and Welfare Effects," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 29(01), April. [Downloadable!]
  4. Fontaine, Damien & Gaspart, Frederic & Henry de Frahan, Bruno, 2008. "Modelling the impact of private quality standards on the fresh fruit and vegetable supply chains in developing countries," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44378, European Association of Agricultural Economists. [Downloadable!]
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